First-time home ownership is one of life’s most exciting milestones. Many of us have big dreams and sentimental wishes for what our first home will be like. Taking this leap is something to plan for over a significant amount of time. So, how do you know if you’re ready to take the leap, call an agent, and start touring homes? Transitioning from being a resident to being an owner means you’ll be taking on a lot more financial responsibility, and you’ll need to be prepared for all the logistics.

Ready to stop pinning dream homes and graduate to actual house hunting? Here are three main areas to have nailed down before you start your first-time homebuyer journey.

Finances

Not surprisingly, finances are the most important element of preparation for buying. Many millennials are buried in student loans, and Americans in general carry a lot of credit card debt. About half of us live paycheck to paycheck.

Being in debt and not having much savings makes purchasing a home much more difficult, if not impossible in many cases. If your goal is to buy a home, it’s important to be strategic about optimizing your debt-to-income ratio.

Take your gross income into account, then consider your projected housing expenses based on a potential mortgage. Experts recommend that you cap housing expenses at 28% of your gross income. As a homeowner, these expenses vary widely and include mortgage payments, insurance, taxes, and more.

Besides income, you’ll also need to take a look at your debt, credit history, and savings.

36% is the number experts recommend for a debt roof compared to your gross income. And that’s including a mortgage payment. So if your current debt plus a mortgage payment would put you over that limit, it’s important to chip away at what you owe before considering home ownership.

Credit history is also a vital consideration. You need a good credit score and a somewhat substantial history in order to qualify for a mortgage.

And finally, besides saving for a down payment, you also need to save for unexpected repairs, closing and moving costs, and property taxes. Living too close to the red as a homeowner can mean ending up in financial disaster.

Employment

It may not be enough to just have a good job and an adequate income the moment you begin house hunting. Lenders also take into account:

• The length of time you’ve worked for your current employer
• Any history of unemployment or income loss
• Any prior job loss

If you are an independent contractor and file a 1099 instead of a W2, lenders will expect you to have at least 24 months of job history under your current contract, regardless of your income and other considerations.

Stability

Planning to move away from your area in less than 3-5 years? Reconsider the idea of purchasing a home right now. It’s unlikely you’ll come out ahead financially if you try to sell within that time frame.

Make sure you’re content to live in your geographical area for several more years before you commit to a home purchase.

Working through the steps of preparing your finances, employment situation, and overall stability can pay big dividends once you’re ready to buy your first home.