Get ready to buy (2024)

FAQs

What not to do when getting ready to buy a house? ›

Assess your financial readiness and credit score before buying a house. Determine your budget and calculate how much you can afford to spend on a house. Research and explore different financing options, such as conventional, FHA, VA, and USDA loans.

The minimum credit score needed for most mortgages is typically around 620. However, government-backed mortgages like Federal Housing Administration (FHA) loans typically have lower credit requirements than conventional fixed-rate loans and adjustable-rate mortgages (ARMs).

Conforming loan down payments can vary from 3% to 20% or more, so for a $500,000 home, you'd need between $15,000 and $100,000. Conforming loans, once again, follow Fannie Mae and Freddie Mac guidelines and usually offer competitive terms.

The 28%/36% Rule

According to this rule, a maximum of 28% of one's gross monthly income should be spent on housing expenses and no more than 36% on total debt service (including housing and other debt such as car loans and credit cards). Lenders often use this rule to assess whether to extend credit to borrowers.

A good number to shoot for when saving for a house is 25% of the sale price to cover your down payment, closing costs and moving expenses. (This amount is separate from saving up 3–6 months of your typical living expenses in a fully-funded emergency fund—which I recommend you do first, before saving up for a home.)

You should aim to keep housing expenses below 28% of your monthly gross income. If you have additional debts, your housing expenses and those debts should not exceed 36% of your monthly gross income. Your max purchase budget is the loan amount that lenders could probably give you based on what you've told us.

For a $200,000, 30-year mortgage with a 6% interest rate, you'd pay around $1,199 per month.

What credit score do I need to buy a $250000 house? ›

To qualify for a conventional loan, you'll need a credit score of at least 620, though some lenders may choose to approve conventional mortgage applications only for borrowers with credit scores of 680 and up.

What credit score is needed to buy a $300K house? The required credit score to buy a $300K house typically ranges from 580 to 720 or higher, depending on the type of loan. For an FHA loan, the minimum credit score is usually around 580.

It means saving up an adequate down payment, identifying the right mortgage lender, checking your credit rating, minimizing your debts, setting aside cash for closing costs, and getting pre-approval for a mortgage in advance. All before you go to your first open house.

It is possible for consumers tofix their credit score in as little as three to six months. How quickly you can repair credit to buy a house will depend on your current credit score, how quickly you can pay off total debt, and whether you can become an authorized user.

How many times to look at a house before buying? Ideally, four to six viewings should be sufficient.

A big purchase is anything that's outside normal spending. So a homebuyer can still buy groceries, make car payments, pay for their yard service, and go to restaurants. The mortgage lender will, however, flag any unusually large expenses.

While you're waiting to close on a home, you can still use your credit card, but it's best to only use it for small purchases and pay off the balance in full. Do not make large purchases you cannot afford to pay off that'll leave you carrying a significant balance from month to month.