The following first-time homebuyer mortgage checklist will help get you started on the road to your new home because the primary thing you need to focus on is qualifying for a mortgage, since you’ll need to know how much house you can afford. Being pre-qualified also shows sellers that you’re serious about finding your new home!
- Qualifying Income – Must have 2 years of income history to qualify
- W2, self-employed or 1099 employee NOT bonus
- Self-employed? Net income = Qualifying income
- Not self-employed? Gross income = Qualifying income
- Rental Income – Must have 2 years of rental income history to qualify
- Other forms: Social security, commission, car allowances, child support, interest and dividend income. Be sure to see a mortgage professional for additional forms that may qualify.
- Different loan programs have different requirements
- FHA Loans: Can be approved with a credit score of 580
- Conventional Loans: Requires a credit score of 620 – Most lenders require a 640 credit score
- Good credit profile = Better rates – Anything over 740 is considered excellent
- Factors that weigh on your credit score: Payment history, outstanding credit balances, credit history, debit/credit ratio, type of credit, and inquiries.
The following assets may be resources for your down payment and must be verified by your lender:
- Savings/Checking account
- IRAs, thrift saving plans, 401(k) and Keogh accounts
- Stocks and bonds
- Savings bonds
- Gift funds
- Sale of personal property
- Downpayment assistance programs
- Sale of real estate
- Collateralized loans
- Disaster relief grants and loans
- Employer assistance programs
Approximately 5% of your down payment must come from the buyer on conventional loans.
- Employment history of at least 2 years
- Education counts as history
- Self-employment must be greater than 2 years by the same business
VIDEO: See what else you need to know in buying a Boston area home