08/09/2021
1. Check your credit.
Once you decide to buy a home, the first thing you’ll need to do is check your credit. The higher your score, the lower your rate. Most mortgage programs require a minimum credit score between 580 and 620.
2. Figure out your DTI.
Your debt-to-income (DTI) ratio is the percent of your monthly gross income that goes toward debt repayment. Mortgage lenders use this percentage to gauge affordability. Typically, lenders prefer a DTI ratio that’s no higher than 36% to 43%, depending on the mortgage program.
3. Save money.
Loans start at 3% to 5% for a conventional loan, and a minimum 3.5% for an FHA home loan. A down payment isn’t required with a VA loan or a USDA loan. You’re also responsible for closing costs — which are roughly 2% to 5% of the loan amount.
4. Determine your budget.
Before meeting with a mortgage lender, use an online mortgage calculator to estimate affordability.
Once you know what you’re likely to afford, you can then estimate how much to save for your down payment and closing costs.
We are here to help you with every step of your home buying journey. Contact us today 📲
