Real Estate the Ramsey Way - The Mindset You Need to Buy Your First Home (Dave Ramsey Explains)

Episode Date: May 25, 2026

Buying your first home starts with the right mindset. Dave walks through how to think about the process so you can make a confident and well-informed decision. Next steps: ·   🏠Not sure what to do next when buying or selling your home? Check out our ⁠⁠Real Estate Home Base⁠⁠ for free tools and resources to guide your next steps. ·   🏠And if you’re ready to buy or sell your home, ⁠⁠connect with a RamseyTrusted® real estate agent⁠⁠. They’re experts who’ll help you confidently navigate homeownership the way we teach. Explore more from Ramsey Network: 💸 The Ramsey Show Highlights 🧠 The Dr. John Delony Show 🍸 Smart Money Happy Hour 💰 George Kamel 🪑 Front Row Seat with Ken Coleman 📈 EntreLeadership   Ramsey Solutions Privacy Policy

I'm looking to be a first-time home buyer. I'm 27 years old, and I have about $120,000 saved up towards. How'd you do that? Just staying out of debt for a number of years. It builds up over time. Look at you. What do you make a year? About $80,000 after, like, stocks that my company gives and stuff like that.

But haven't you heard that all Gen Z's life has been ruined by the real estate market? That it's impossible for you to buy a house, and yet you, young man, went out and saved $120,000. I'm so proud of you. Well, thank you. But, yeah, I just want to make a wise decision with my first home buy. I think I can comfortably get over the 20% needed for a BMI, but I wanted to get as much direction as I possibly could.

Okay. What are you thinking about doing? I want to buy a smaller home, so something like the $250,000 to $300,000 range. but I want to make sure that my funds I'm putting in are going to give me still a comfortable home that I can be able to enjoy for that range. Yeah, that makes sense. Well, that just involves a lot of shopping.

And so what happens is I have found this. When I teach leadership, I often tell guys when they're making decisions and gals, when you're making decisions, he with the most options and the most patience, makes the best decision. They also win the, they also win more negotiations, by the way. So options mean you look at a lot of properties. You don't go look at three and buy the fourth one.

And you learn, you learn the market, you drive the neighborhoods, you drive them on Friday night to see if it sounds different than the neighborhood than it does on Thursday morning. You know, you check the traffic patterns,

you learn and you feel the air, And you look at the properties, you look at how old they are, how worn out the appliances are, you know, what am I getting myself into? And you just gather data and let that data soak into your brain. And it'll become what's called common sense after a while. And then you'll make a much better choice than somebody that just moves to town and looks at three houses, right? Okay. You're a marathon runner anyway. You're not a sprinter.

You like to go steady. That's your style. I can tell by the way you raised that money. You saved that money over time. Right. Use that same personality trait to make this decision. Okay. Yeah, I was wondering about just, I was told like foreclosure with an option,

but I'm not very comfortable with that kind of thought, but I didn't know if maybe a home inspection would be enough that kind of warrants some of the risk that might be coming with that. You need a home inspection, you need a home inspection and a title policy no matter what you buy. Foreclosure doesn't necessarily mean bargain, and it doesn't necessarily mean the property's trashed. But it could mean both. So you just get in there and dig around and you go, okay, I looked at four houses on the street. They're all 300.

This one's 150, but it needs a roof. It's going to need all new landscaping, and I'm going to have to paint it and all new appliances and the kitchen's got to be torn out. Okay, so I'm going to have another 100 in it and so I'm going to have 250 in it when I'm done, but it'll be like new. Okay, that might be a deal or it's trashed and it's a foreclosure and they're still trying to get as much for it as everybody else is trying to get for theirs, which happens all the time, by the way. But people buy it and think they got a deal just because it said foreclosure, but it's the same stinking numbers the house next door. Right. That's not a deal. So you know a deal because you've looked at the other ones that aren't a deal.

Gotcha. Okay. And then, you know, I wouldn't suggest you get into a heavy rehab, but if you need some new bushes and a new paint job, you can probably do that one. But I wouldn't, on my first home 27 years old, I wouldn't suggest becoming a remodeler all of a sudden. Okay. Just because they do it on TikTok doesn't mean you need to do it. right yeah i got a feeling you're going to do really well matthew

that guy's got it he's got it figured out john yeah i like that guy man and it's uh i think you the word you use that resonated with me is patience and for a guy like that once he flips the switch i'm gonna buy the real challenges can you take six weeks or six months and just go slow and the right place will emerge you got you you have cash and you've got diligence and you've got a good salary. You're good. Yeah, there's nothing on fire. Just be patient, yeah.

Yeah, and dig, dig up something that you like the house, and it's in good enough condition that you can see it becoming with the money that you have, the place that you're going to be for a while. Don't call it your forever home because it's not. There's only one forever home, heaven. We have an 82-year-old neighbor that wants us to consider using a contract for D to person or come now? Absolutely not.

Oh. Under no circumstances, do you do that? And I'll explain to you why. Okay. A contract for deed means the property is in her name. And when you fulfill the contract... Is there a way to do it? Sorry.

Sorry. Is there a way to do it where it's in our name? That's the only thing you can do that I would do. We'll talk through that in a second. Let me finish on the contract for deed. Okay. So it's in her name, and you, pay payments and when the amount is paid off, then she transfers title to you. Okay. Problem is if that

person falls asleep at the wheel and hits somebody head on and gets sued for a half million dollars, there's a lien on property that you thought you owned, but it's not in your name. It's in her name. So they put a lien on her property for $500 million. And now you don't ever get this property, no matter what happens. Or she forgets to pay the IRS. She's 82 and she didn't file her tax returns. And they put a lien on the property that she owns because it's in her. her name. So everything that she could possibly do to screw up life lands on you after you pay payments on this for 10 years. So not a chance you ever do to contract for deed. Very dangerous way to take title. Now, I assume does she have a debt on the property? No. Good. Well, then it's very

easy. She wants to sell it to you and move away or stay in the property. No, she wants she wants to live there until she passes and then we'll take the property over. Okay. That's very easy. You need to just see a real estate attorney, and all you've got to do is just transfer the title, and she carries back a mortgage against it. You pay the mortgage. And if she dies, you have to finish paying the mortgage to her heirs, correct? Correct. Okay.

Or if she dies, the mortgage is forgiven in return for having her. And then what she's getting is a life estate, a life estate. So while she's alive, she can live in the property. and I would qualify that life estate even further while she's alive and medically able to live in the property. So let's say that she ends up in memory care because of it early on. It wouldn't be early onset, but dementia, okay? And it can't live in the property anymore, but then she lives six more years. Meanwhile, the property is sitting there rotting down because you can't take it because she's still alive.

So if at the case she's, so life estate. qualified extra qualification that if she's unable medically to live in the property anymore, it goes ahead and transfers as if she had passed. And then whatever happens to the mortgage, you guys can negotiate that at that point. But you pay the payments until either she dies or until you pay it off to her kids, and the property is in your name the whole time, just like you took out a mortgage, only the mortgage is held by her.

So it's like seller finance. Exactly what it is. We do it. Okay. Seller finance, modified by a life estate with a medical qualification. Fantastic. Thank you so much.

And that protects you and protects her, and everybody's going to get a good deal here. Hey, guys, thanks for listening to Real Estate the Ramsey Way. Now, if you're here, you're probably thinking about buying or selling a house. It's exciting. And one of the biggest financial decisions you'll ever make. But you don't want to do it with an inexperienced,

agent who will rush you into costly mistakes, like the ones some of our callers find themselves in. You need a pro who knows what the flip they're doing and will keep you on track with your financial goals. That's why we only recommend Ramsey trusted real estate agents. These are vetted, hand-picked pros who actually listen to your needs, guide you through the process, and fight to get you the best deal. To find a Ramsey trusted agent near you, go to Ramsey Solutions.com, slash trusted agent. That's ramsysolutions.com slash trusted agent.