Over the years working in the mortgage industry, I've found that a good majority of would be first time home buyers have been lead to believe that it is very difficult to qualify for a mortgage. While it is true that lending restrictions have tightened some from the good old days of the mid 2000's, you may be surprised to find out that making your dream of being a homeowner may be easier than you think.
Let's talk about the basics. First off credit score. The minimum middle credit score needed to qualify for an FHA mortgage is a 600. (There are some lenders that may do it with a lower score but I've found this to be a good basic minimum)
Secondly, you need to a job so you can afford your new mortgage. So how do you know if you are making enough? Well, a good general rule of thumb is a 50% DTI or debt to income ratio. Add up all of the monthly debt on your credit report and divide that by your gross income. That is your debt ratio. So if you make 5000 per month, and you have 2500 of monthly debt, you have a 50% DTI. Get it?
Now DTI calculations can get a bit confusing so I stronly suggest you have a licensed Mortgage Company or loan officer do these calculations for you if you are thinking about purchasing a home. (hint hint)
What your loan officer will do is calculate your new projected mortgage payment with property taxes, insurance, and any homeowners association fees along with all of your other monthly debt to see if you qualify.
Next, you need a down payment.
Now here is the part where I find people are confused the most. This is where I may be able to put you at ease. I won't get into all of the different types of loan programs out there but a good rule of thumb for purchasing a home with FHA financing is a 3.5% down payment. That's right, only 3.5%!! So if you find that cute little townhome in Bolingbrook that you have always coveted from a far for sale at $100,000.00 you only need $3500 down payment. Oh and here's the best part.... In some cases, you may not even NEED that whole amount at closing. There may be some lender or seller credits that you get that will have you needing less! (again, those credits can get a little complicated so that is what a licensed loan originator/mortgage company is for.)
Not to get you too excited but there is another FHA program out there that calls for only a $100 down payment. There are other government programs that have a NO down payment feature. It's all about finding a mortgage professional that knows what these programs are and how to qualify for them.
The long and short of it is. TALK TO A MORTGAGE PROFESSIONAL AND GET PREQUALIFIED. There is a good chance that you are paying more for rent that you would be paying if you actually purchased the property.
Of course, you can always get prequalified for free at our company website www.qualitymortgage4you.com
Or, you can call and speak to me and I will put you in touch with one of the licensed loan officers at our company. 630-330-2229 is my cell phone. Call or text. It all works!
Look out for more blogs in the future!