What Is Needed to Qualify for the Best Home Buying Loan
Whether you are looking to purchase your very first home or are interested in upgrading to a larger, more spacious house, you may be wondering what it is that you need to do to make sure that you get the best home buyers loan possible for your new purchase. There are a number of things that you should consider before you ever actually start looking at homes.
Shop Around for the Lowest Rate on Home Buyer Loans
A lot of people take great pains to make sure that they compare prices for even the most minor of purchases. Unfortunately, the same individuals don't take the same steps when it comes to a home mortgage. Different rates and costs can vary drastically from one lender to the next, which means that it is well worth taking just a little bit of time to compare some of the options in order to find a home buying loan that best suits your particular needs.
Take A look At Your Situation
There are a number of things that can have a profound effect on whether or not you qualify for a home buying loan at all or get the best possible rate available. Some of these factors include:
Debt to income ratio
If you have not been at your current job for at least six months, you may find that many lenders are not able to help you at all. A steady work history is crucial when it comes to qualifying for a home loan. Likewise, a good credit score can be vital when it comes getting the best possible rate available. If you do not have a good credit score or if your credit history is relatively limited, you may still qualify for a home buyer's loan if you go through the FHA. This is especially true if you are purchasing a first home.
It's also important that you not overlook your current debt to income ratio. As regulations get stricter, many banks require you to have a debt to income ratio that is no greater than 43%. In some cases, you may be able to loan if your debt to income ratio is as high as 55%, but taking the time to pay down any loans that you currently have will make it easier to qualify for a home buying loan in the future. This is also true of any judgments or collections that you currently have against you.
Lastly, the amount of money that you have available to put as a down payment will play an important role when it comes to the amount that you are qualified to borrow.