First Time Buyers

Buying Your First Home: What You Actually Need to Know About the Money

Buying a house is exciting, and understanding the numbers can make the process feel much more manageable. Strip away the banking jargon, and there are really two big questions to answer: How much home fits your budget, and how much cash might you need upfront?

When you buy a home, the purchase price is only part of the financial picture. Here is a simple, no-nonsense breakdown of how the money side works.

1. The True Cost of Your Monthly Payment

When you look at a house online, you see the total price tag (like $350,000). But you don't pay that all at once. You pay it monthly.

Your lender will look at whether the monthly payment fits within your overall financial picture. One factor is your debt-to-income ratio (DTI), which compares your monthly debt obligations with your gross monthly income. That can include your new housing payment along with debts such as student loans, car payments, and credit cards. DTI requirements vary by loan program and borrower qualifications, so your loan officer can help you understand what may apply to you.

2. The Down Payment: A Large Down Payment Isn't Always Required

One of the biggest misconceptions about buying a home is that you need a large down payment before you can get started. Depending on the loan program and your qualifications, you may have options that require less money upfront.

Today, there are several financing options that may help qualified buyers get started:

• Standard Loans: Some financing options may require less money upfront than you might expect.

• FHA Loans: FHA financing can provide additional flexibility for qualified homebuyers, particularly those with limited funds for a down payment or who have experienced some credit challenges.

• Special Loans: Eligible military borrowers and buyers purchasing homes in qualifying rural areas may have access to VA or USDA financing options that require little to no down payment.

Keep In Mind: Some loan options may include mortgage insurance, depending on the program and amount of your down payment. Your loan officer can explain when it applies and how it may affect your monthly payment.

3. Closing Costs:

Your down payment is not the only upfront cost to plan for. Closing costs are another important part of your homebuying budget.

Closing costs can include lender charges, appraisal and title-related fees, government fees, prepaid expenses, and other costs associated with the transaction. They vary based on factors such as the home price, loan type, down payment, lender, and location. Your Loan Estimate can help you understand the costs associated with your specific financing.

4. Your Credit Profile Matters

Think of your credit profile as one part of your overall financial picture. Your credit score and credit history can affect the loan options and terms available to you, along with factors such as your income, debts, assets, and down payment.

Before you apply for a mortgage, review your credit reports for accuracy and be thoughtful about taking on new debt. If you are considering opening a new credit account or making a large purchase, talk with your loan officer first so you understand how it could affect your financing.

5. Start With a Conversation

You don’t have to have every number figured out before you start exploring homeownership. A loan officer can help you understand what your monthly payment could look like, how much you may need upfront, and which loan programs may fit your financial situation.

Even if you’re not ready to buy today, starting the conversation early can help you understand where you stand and what steps may make sense next.

Buying your first home comes with a lot of numbers, but you don’t have to sort through them on your own. I’m here to help you understand your options, answer your questions, and build a plan that works for you.

This is not a commitment to lend. All loans are subject to credit review and approval. Other terms and conditions may apply..