First time buying a home? Start with these 3 steps
- Sept. 5, 2023
- 3 min read
Best practices for first-time homebuyers
Calculating how much home you can afford
How to prepare your finances for homebuying
The decision to transition from a renter to a homeowner is a big one, personally and financially. You have a lot to consider — such as location, size and cost. Buying a home is a big investment. Here's how to get started.
1. Consider all the costs
Once you’re house hunting, it’s easy to get caught up in the excitement. Now is the time to sit down and do the math. If you’re not sure where to start, this free calculator may help you identify your ideal price tag for your first home.
2. Check your credit score
Typically, those with a score over 670 are considered by lenders to have good creditworthiness. Most mortgage loans require a score of at least 620, so you may want to improve your credit score before applying. By paying your bills on time, avoiding opening new lines of credit and maintaining a low credit utilization rate, you can begin to boost your score.
3. Know your debt story
Another essential element of your financial journey as a new homebuyer is your debt-to-income ratio ( DTI ). This percentage shows lenders how much of your money goes toward debt, providing a clear picture of how much you can put toward your mortgage payment each month. As you prepare for homeownership, a low DTI (36% or below) may make it easier to get a loan.