1. Check your credit. Generally, to qualify for a home loan, you’ll need good credit, a history of paying your bills on time, and a maximum debt-to-income (DTI) ratio of 43%. Lenders these days generally prefer to limit housing expenses (principal, interest, taxes, and homeowners insurance) to about 30% of the borrowers’ monthly gross income, though this figure can vary widely, depending on the local real estate market. You’ve signed the papers and paid the movers, and the new place is starting to feel like home. Game over, right? Not quite. Homeownership costs extend beyond down payments and monthly mortgage payments. Let’s now go over some final tips to make life as a new homeowner more fun and secure.
  2. Sometimes a bank will give you a loan for more houses than you really want to pay for. Just because a bank says it will lend you $300,000 doesn’t mean that you should actually borrow that much. Many first-time homebuyers make this mistake and end up “house-poor” with little left after they make their monthly mortgage payment to cover other costs, such as clothing, utilities, vacations, entertainment, or even food. It’s easy to fall in love with homes that might stretch your budget, but overextending yourself is never a good idea. With home prices trending upward, it’s especially important to stick close to your budget.
  3. Many popular first–time home buyer programs have no income limit. For example, buyers can qualify for an FHA loan with 3.5% down, or a VA loan with zero down, at any income level. But some first–time home buyer programs do impose maximum income caps. To qualify for a zero–down USDA loan, for example, your income can’t exceed 15% above the local median. Similarly, many down payment assistance grants set caps based on the local median income.
  4. Don’t forget miscellaneous expenses. Be sure to budget for moving expenses and additional maintenance costs. Newer homes tend to need less maintenance than older ones, but all homes require upkeep. If you’re considering a condo or a home with a homeowners association (HOA), remember to include HOA dues in your budget. Keep in mind that you should have an emergency fund on hand to prepare for any unexpected changes in your income (like a reduction in your wages) or unexpected expenses (like medical bills).
  5. CHFA understands that the home buying process can be complicated, therefore we encourage all first-time homebuyers to attend a free Pre-Purchase Homebuyer Education Workshop offered by CHFA-Approved Housing Counseling Agencies throughout the State. Our expert housing counseling professionals will teach you about the entire home buying process, financial responsibilities of homeownership, and answer your questions to help you decide if homeownership is right for you.

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