Home Financing Is Easier Than You Think
You saw an online ad for low mortgage rates and decided to apply — just to see if you qualify. Now your phone is buzzing nonstop, and lenders are emailing you about “DTIs” and W-2s.
The onslaught of financing questions can be baffling when you’re tackling them alone. But it doesn’t have to be that way.
Looking for some insight to make financing more straightforward? These four tips will get you started:
1. It’s okay to play the field. Don’t be afraid to apply for several loans with different lenders to compare the terms and rates. You can — and should — shop around.
Just be sure to do so within a set time period to avoid multiple credit inquiries.
2. Manual underwriting can help you qualify. Most lenders automate their approval process to speed up transactions. However, if you fall outside conventional requirements, they can’t see your full financial picture. That’s where manual underwriting comes in.
Buyers with concerns about their income or credit should verify that their lender will manually underwrite the loan if needed.
3. Broaden your prospects with a fixer-upper mortgage. Buying a fixer-upper can give you more home at a lower price. Did you know that the Federal Housing Authority (FHA) and Fannie Mae offer loans that will cover the mortgage and necessary home repairs?
4. You don’t need 20% down. Perhaps the biggest homebuying myth is that you can’t buy without 20% down. But you can. Here’s how:
Low Down Payment Options: FHA loans only require 3.5% down with a FICO score of 580 or higher, or 10% down with a score of 500 to 579.
0% Down Options: Buyers shopping in rural areas may be eligible for a USDA loan with 0% down. For qualified veterans and active-duty military members, VA loans often have no down payment requirement.
Buyer Assistance Programs: There are down payment and closing cost assistance programs available to first-time homebuyers. Not a first-timer? Some are also available to those who haven't owned a home in the past three years.
Mortgage financing can feel overwhelming. But you’re not in it alone.
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