Can you buy a house?
Here is what you need to know and have in order to buy a house.
First you need to know what your score is. What score? Your credit score. Let me preface this by saying I am not a mortgage professional or a loan officer, their guidelines vary from broker to broker, and this information should be verified by a mortgage professional. That being said a pretty standard minimum credit score to qualify for a loan is 580 for an FHA loan and 620 for a conventional loan. If you use Credit Karma or other sites you can anticipate being off a bit.
So you know your score, what now? The next road block a lot of people can run into is the debt to income ratio. If you have too much debt, your income is offset and you will run into an issue. Before you go running to pay off all your credit cards you should contact a lender to see what effect this will have on your credit score. sometimes paying a little here and there is enough to boost your score and get you qualified.
What about second jobs? There are strict guidelines as to what can qualify toward your income, for instance, to use a second job you have to have been employed there for at least a year for most lenders.
Down payment is not the only cost you will incur. yes your down payment is important and helps to determine if you can buy more or less house. You will also run into closing costs. Closing costs usually range from 3-5% of the purchase price in my experience. Some of this can be included in seller concessions, but there are also limits that directly relate to your down payment as to how much you can get in seller concessions. An example would be if you bought a $200,000 house with $20,000 down, you could be looking at closing costs between $6,000-$10,000. That means to close on the property you would have to bring potentially $30,000 to the closing table.
There are many unique assistance programs for down payment assistance and closing cost help. There are also other loan programs for little to no money down. Of course all of these are contingent on qualifying.
In short, the main road blocks to buying a house are:
To qualify for the loan, you have to have a high enough credit score and low enough debt to income ratio. How much you can borrow is determined by your income and your debt to income ratio.
I hope this information was helpful, and as always if you have any questions, Call me.
Keven Beach, Realtor