Get pre-approved For
If you don’t know much about getting a mortgage, you are in the right place. Here are some of the financial factors required by lenders so you get to be in good shape before buying a house:
- Credit score: Different lending companies have different rules regarding the minimum credit score required for a home loan. Frequently, for a conventional loan you need to have at least 620 in your FICO score. The minimum credit score for a FHA loan is usually 580. However, FHA loans are insured by the Federal Housing Administration and they might contain stricter guidelines.
- Debt-to-income ratio: This is a relationship between the amount of money you earn and the percentage you spend each month. In most cases, you’ll want to spend between 36% and 40% of your income on debt each month.
The higher your debt-to-income ratio, the less likely you are to be approved for a mortgage; however, most lenders are more forgiving if you have a high credit score. While some lenders will approve mortgages for borrowers with a DTI as high as 43%, in most cases, it’s best to keep your DTI under 36%.
- Down payment: on a conventional loan, it depends on your credit score. Lenders can require a minimum of 3% and as much as 20% for your down payment.
- Closing costs: Home buyers normally pay about 2%-5% in closing costs. During closing you will pay for escrow, Title insurance, property taxes, Private mortgage insurance, lenders fees, attorneys fees, and sometimes real estate agent’s fees.
Most sellers won’t show you their home unless you have a mortgage pre-approval letter. They don’t want to waste their time with buyers who aren’t serious or financially ready to put in an offer. Getting pre-approved for a mortgage gives you and the seller confidence that if they accept your offer, you’ll be able to get financing and close the deal.
Get in Touch
Let's Discuss Your Real Estate Needs Today!