The Buyer's Guide
Welcome to The Buyer’s Guide—your trusted resource for navigating the home-buying process with confidence. Whether you're a first-time buyer or an experienced homeowner, this is where you'll find valuable insights to help you make informed decisions and move forward with clarity. I'm here to guide you every step of the way, ensuring a seamless experience from start to finish. Let’s make your journey to homeownership a success!
How to Qualify
How Much House Can You Buy?
Mortgage lenders recommend you do not buy a home that is more than 3 to 5 times your annual household income. If you are not purchasing a home with cash, you will need a mortgage pre-approval provided by your mortgage lender. A lender will work with you to get a loan that meets your needs. Some buyers are concerned with keeping their monthly payments as low as possible, others want to make sure that their monthly payments never increase.
Check Your Credit.
Mortgage requires a good credit score. You can improve your score by:
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Paying down credit card balances but not closing accounts
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Continuing to make payments on time
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Avoid applying for a new credit card or car loan before and after you have been approved
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Avoid making big purchases before and after you have been approved
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If possible, avoid job changes before and after you have been approved
Get Pre-Approved
Being pre-approved, unlike being pre- qualified, means you've actually been approved by a lender for a specific loan amount. You will need to provide documented financial information (income, statements, assets, debt & credit reports etc.) to be reviewed & verified by the lender.
Income QUALIFICATIONS
QUALIFYING INCOME
NON-QUALIFYING INCOME
NEEDED DOCUMENTS
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W-2 Income/Salary
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Income from part-time jobs
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Income from a second Job
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Overtime & Bonuses
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Seasonal jobs
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Self-employed Income
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Alimony & child support (Documentation required)
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Income from the lottery
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Gambling
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Unemployment pay
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Single bonuses
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Non-occupying co-signer income Unverifiable income
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Income from rental properties
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W2's From Past 2 Years
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3 Months Worth of Pay Stubs
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Bank Statements (Past 3 Months)
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Previous 2 Years of Tax Returns
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List of Debts and Assets
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Divorce Decree
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Additional Documents as Requested by Lender
Types of Loans
Which Loan Is Best for You?
Choosing the right type of loan is one of the most important decisions you’ll make as a first-time homebuyer. Each loan option comes with its own set of requirements, benefits, and costs, which can significantly impact your monthly payments and overall financial plan. The right loan will align with your budget, credit profile, and long-term goals, ensuring you’re in a position to comfortably afford your new home. Understanding your options not only empowers you to make informed decisions but also sets the foundation for a smooth and successful homebuying journey.
VA LOAN
REQUIREMENTS: Veterans; Reservists & National Guard; Honorable Discharge Personnel; Surviving Spouses
DOWN PAYMENT: NONE
MINIMUM CREDIT SCORE: 580
203K LOAN
REQUIREMENTS: Anyone who plans to purchase a fixer-upper or needs to renovate their home and meets credit & income requirements
DOWN PAYMENT: At least 3.5% of purchase price
MINIMUM CREDIT SCORE: 580
CONVENTIONAL LOAN
REQUIREMENTS: Depending on the program, available first time home buyers (a buyer who hasn't owned in the last three years) can put 3% down with a Conventional Loan
DOWN PAYMENT: Varies from 3%-20% of purchase price
MINIMUM CREDIT SCORE: 620
USDA LOAN
REQUIREMENTS: Someone who is buying a home in a USDA designated rural area.
DOWN PAYMENT: NONE
MINIMUM CREDIT SCORE: 640
FHA LOAN
REQUIREMENTS: Anyone who meets the minimum credit and income levels
DOWN PAYMENT: At least 3.5% of purchase price
MINIMUM CREDIT SCORE: 580
Down Payment
What Is A Down Payment On A Home?
A down payment on a house is the money a buyer pays upfront to complete the real estate transaction. Down payments are typically a percentage of a home’s purchase price and can range from 3% – 20% for a primary residence.
The required down payment is usually determined by the type of mortgage you choose, your financial situation and the type of property you’re buying.
Why Do Lenders Require A Down Payment?
When your mortgage lender gives you a loan, they’re investing in you. As you likely know, all investments come with some degree of risk. A lender’s risk is that a borrower may stop making mortgage payments, and they won’t recover the money they loaned.
Here are two ways putting money down can help a lender feel more confident about a borrower’s ability to repay their home loan:
The Down Payment represents your investment in the home. If you stop making mortgage payments, you’ll be walking away from the thousands of dollars you invested in the property with your down payment.
It lowers the mortgage loan amount. If you make a down payment that’s 20% of the home’s purchase price, the lender only has to lend you 80% of the purchase price. That’s less money they’ll be entrusting you to repay.
Down Payment requirements aren’t solely determined by lenders. In many cases, the down payment requirement is set by the entity backing the loan.
Closing Cost
Your down payment isn’t all you need to bring to the closing table when you buy a home. Closing costs are expenses beyond the down payment, such as appraisal fees, attorney fees and escrow funds, etc. that you pay on closing day.
What Are Closing Costs On A House?
Closing costs are paid when you close on your mortgage. These costs come about through the process of creating your loan.
Closing costs cover the fees for services like your home appraisal and searches on your home’s title. The specific closing costs you’ll need to pay depend on the type of loan you borrow and where you live.
How Much Are Closing Costs?
Closing costs are typically 3% – 6% of the loan amount. This means that if you take out a mortgage worth $200,000, you can expect to add closing costs of about $6,000 – $12,000 to your total cost.
Closing costs don’t include your down payment, but you may be able to negotiate them. Just be aware that your negotiating power can depend heavily on the type of market you find yourself in (like a buyer’s or seller’s market).
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