What to Know if You're a First Time Home Buyer
The standard down payment is 20 percent. However, there are many lenders that will allow you to pay as little as three percent. It is a good idea for you to save up for a down payment on a mortgage. You can use a down payment calculator in order to determine how much money you will have to save.
You Need to Save Up for a Down Payment
Your credit is one of the factors that will determine whether you can get approved for a mortgage. Most lenders will require that you have a credit score of at least 620. Even though it is possible for you to get a home with a low credit score, it is best for you to work on your credit before you apply for a mortgage.
You Should Check Your Credit
Paying your bills on time will help boost your score. You will also need to pay down your debts. Additionally, if you have past-due accounts, then you will need to pay them down.
If you are struggling to get a conventional mortgage, then you have other options. You can get a Fannie Mae or Freddie Mac loan. Those loans are backed by a government-sponsored entity. You may be able to get a loan for as little as three percent down.
Explore Your Options
You can also get a FHA loan. These loans are backed by the Federal Housing Administration. You may be able to get a loan with as little as 3.5 percent down payment. If you are a veteran or married to someone who is a veteran, then you can get a VA loan.
It is a good idea to review your finances and determine what you can afford. This is one of the most important tips that you need during the home buying process. A good rule of thumb to spend less than 30 percent on your housing costs. For example, you make $3,000 per month. Your housing costs should not exceed more than $1,000.
Look at Your Finances
You do not want to be in a situation where you are spending the majority of your money on your housing. You will also need to consider the cost of utilities and home maintenance.