Bud Jones - Prescott Realtor discusses what first time home buyers need to qualify for a loan

It's not uncommon for first-time home buyers to have questions about the mortgage approval process. If you're a first-time home buyer, Prescott Realtor Bud Jones, would like you to know about some of the most important factors mortgage lenders consider during the qualification process.

• Income
• Credit score
• Debt to Income ratio
• Down payment

Income
Your income will, of course, affect your ability to qualify for a mortgage loan. Income is not restricted to a paycheck but every source of income is considered. Examples of different sources of income income include spousal maintenance, child support, Social Security and disability income to name a few. Your mortgage lender will want to ensure that you have sufficient income, whatever the source, to meet your monthly mortgage obligation.

Credit Score
How you have borrowed in the past, the type of debt, the terms of debt repayment and the history of your repayment including any delinquencies or bankruptcies are all a part of the complex algorithms that are used to compile your credit score. While minimum requirements vary from one lending program to another, the FHA program is one of the more lenient requiring a minimum score of 580. Conventional loan programs usually have higher score requirements.

Debt-to-income Ratio (DTI)
You debt to income ratio is exactly how it sounds. It compares how much reccurring debt you have to how much income you have. Many lenders establish ratio maximums in the 40%-43% range. In terms of your total DTI ratio lower, of course, is better. As the ratio of how much you have to pay out every month compared to how much you bring in approaches 50% you can expect difficulty in qualifying for a home loan.

Minimum Down-Payment Requirements
Unless your lending program is a VA or USDA loan (both government-backed programs) you should be prepared to make some kind of down payment. Conventional lenders (banks) might require as little as a 3% - 5% while FHA mortgage lending programs allow for a 3.5% down payment. Down payments can come in the form of a gift but must legally be a gift, with no expectation of repayment.

Mortgage lenders will look at these factors and more as you move through the qualification process. Prescott Realtor Bud Jones can not only help you find your dream home, but will answer all of your questions to help you qualify for your first home. For more information visit us at http://www.budsellsprescotthomes.com or call us at 928-710-0643.

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First Time Home Buying in Prescott
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