Buying my first home:

How much money will I need?

Down payment:

Zero, or 3% or as high as 20% of the purchase price for a down payment. The actual amount depends on what kind of loan you get, what type of down payment assistance program you qualify for and how good your credit is.

1 to 8% of the purchase price for closing costs.  This is upfront money for insurance and taxes for the new home. This also includes lender fees for originating and processing your loan.  You might not have to pay this up front. Sometimes it can be rolled into the mortgage or the seller pays.

Cash reserves.  Lenders usually want to see at least 3 months of payments safely in your bank. You are not spending this money, but you need to show some financial cushion.

What do I need to qualify for a mortgage?

1. Money to make the down payment. This can be gift on some types of loans.

2. Income than your mortgage payment. (more on figuring mortgage payments in a minute)

3. Two years of solid employment history (same job or field).

4. Decent (not perfect) credit. (See Credit info)

5. Cash reserves. Lenders usually want to see at least 3 months of payments safely in your bank.

What will it cost?

This calculator will tell you how much the monthly payment is, but not if you really afford the house. That is below. Calculate Payment

 

 What can I afford?

A good rule to go by is your payment should not exceed 25% of your income, although lenders will let you go higher. But just because you can does not mean its a good idea. In addition, lenders recommend that your mortgage, property taxes, insurance and all other monthly obligations not exceed 36 percent of your gross monthly income.

 

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