7 signs you can't afford to buy a home

Flickr/Eneas de Troya

Making the leap from renting to buying is thrilling and liberating — for many, it signifies the realization of "the American Dream." 

Buying a home is also a long-term commitment, and one that requires strong financial standing. 

If any of these signs strike a chord, you may want to delay taking on a mortgage in the near future.

You have a low credit score

Before considering home ownership, you'll want to check your credit score, which you can do through free sites like Credit Karma, Credit.com, or Credit Sesame.

"The higher your score, the better the interest rate on your mortgage will be," writes personal finance expert Ramit Sethi in "I Will Teach You To Be Rich." Good credit can mean significantly lower monthly payments, so if your score is not great, consider delaying this big purchase until you've built up your credit.

You have to direct more than 30% of your income towards monthly payments

Personal finance experts say a good rule of thumb is to make sure the total monthly payment doesn't consume more than 30% of your take-home pay.

"Any more than that, and your finances are going to be tight, leaving you financially vulnerable when something inevitably goes wrong," write Harold Pollack and Helaine Olen in their book, "The Index Card." "To be fair, this isn't always possible. In some places such as New York and San Francisco, it can be all but impossible."

While there are a few exceptions, aim to spend no more than one-third of your take-home pay on housing.

You don't have a fully funded emergency savings account

And no, your emergency fund is not your down payment.

As Pollack and Olen write,

We all receive unexpected financial setbacks. Someone gets sick. The insurance company denies a medical claim. A job is suddenly lost. However life intrudes, the bank still expects to receive our monthly mortgage payments ... Finance your emergency fund. Then think about purchasing a home. If you don't have an emergency fund and do own a house, chances are good you will someday find yourself in financial turmoil.

Certified financial planner Jonathan Meaney recommends having the equivalent of a few years' worth of living expenses set aside in case there is a job loss or other surprise. "Unlike a rental arrangement with a one or two year contract and known termination clauses, defaulting on a mortgage can do major damage to your credit report," he tells Business Insider. "In addition, a quick sale is not always possible or equitable for a seller."