How to Qualify for a Mortgage – Questions from Home Buyers

Interested in buying your first home, but not sure how to qualify for a mortgage? We’re here to help. We’ve compiled a list of frequently asked questions from new home buyers just like you looking to achieve home ownership and be approved for their first mortgage.

Curious about how to qualify for a mortgage? See frequently asked questions.

How to qualify for a mortgage is by far the most frequently asked question we field from first time home buyers. Here are some basic steps that can help you understand how to qualify for a mortgage:

Do I need to check my credit?
Short answer: yes. One key step to getting your first mortgage is to understand your credit standing. By law, you can pull your credit reports from the three credit bureaus (Experian, Equifax and Transunion) for free once a year. Simply go and follow the instructions.
Once you have accessed your credit reports, you’ll know if there are any negative items that may impact your credit and your eligibility for your first mortgage. By taking steps to address any negative items on your credit report, you’re helping make yourself the best candidate for a loan you can be.

Can I afford the monthly payments on a mortgage?

When you buy your first home, you’ll want to make sure you can afford the monthly mortgage payments. As a general rule of thumb, the monthly mortgage payment for home buyers should be no more than a third of your household’s pretax income.

Your income includes:
•    Your salary/paycheck
•    Investment income
•    Alimony/Child Support you receive

When you apply for your first mortgage, your lender will look at how much income you receive versus the amount of financial obligations you have. This is called the debt-to-income ratio. The lower that ratio, the more likely it is that you can qualify for a mortgage.

Financial obligations can include:
•    Credit Card Payments
•    Car Payments
•    Alimony/Child Support
•    Student Loan Payments
•    Other Debts

Do I need to save money for a down payment?
If you are able to save money for a down payment, that’s great! Having money to put down on a house will reduce your monthly payments and expands the range of lending programs that you can qualify for.

Can’t find room in your budget to save? That’s okay too – many of our neighborhoods like Deer Run CommonsHighlandsFlorin Hill and Windsor Meadows are eligible for a lending program that allows home buyers to purchase a home with no money down and $0 in closing costs!

Okay, so I think I can qualify for my first mortgage. What’s a good next step?
Now that you understand the basics of how to qualify for a mortage, visit one of our model homes! Our neighborhood sales managers can walk you through a free basic prequalification* process. At the model, you’ll discuss your general financial situation which will help you understand how your monthly income and financial obligations stack up – and how much home you can afford.

The Bottom Line…
By walking through the basic steps of how to qualify for a mortgage, you’ll understand if you can qualify for a loan. If, in the end, you can’t qualify, you’ll have a better understanding of what steps you can take to prepare yourself for home ownership – and that’s a good thing!

*Charter Homes & Neighborhoods is not a lender. Our advice concerning first mortgage eligibility should not replace the advice of a mortgage professional.