Buying a home for the first time can be a scary thing. There are so many things to consider when making such a big purchase. The magnitude of that can really scare someone away from taking that big step.
There are a few things every first-time home buyer needs in order to but their first house.
- A Good Credit Score – How you have handled your credit in the past will definitely come into play when you are going to buy a home. Generally speaking, the higher your credit score, the lower your interest rate will be, making your monthly payments even lower.
- Low Debt-to-Income Ratio – Another number your lender will look at closely when you are applying for a home loan is the ratio of your debt to your income. Most lenders want to see your total monthly payments of expenses (including your mortgage payment) to be 43% of your income or less.
- Steady Work History – Your lender will look at your work history and will prefer that you have been working at least 2 years at your last employer. If not at the same employer at least in the same field.
- Down Payment – Buyers can qualify for home loans with down payments as low as 5% and even as low as 0% down in some rare cases. However you should always try to have a down payment of at least 20% of the purchase price of your home. You cannot qualify for a home loan, especially one with great low rates, without a qualifying down payment.
- Lots of Cash – Not only will you need a large amount of cash for your down payment, you will also need to pay for any closing costs with cash as well. First-time home buyers, unlike those who have owned a home before, do not have the luxury of using the sale proceeds from their previous home to help purchase their new home.