Choosing the best lender for first-time home buyers

Posted by on February 23, 2022 · Leave a Comment 

Credit

Before verifying any of your other qualifications, lenders will typically run a credit check. Virtually all mortgage lenders use the FICO credit scoring model, and most will pull your scores from all three major credit bureaus and use the middle number for qualification purposes. FHA loans require a minimum 580 FICO® Score for a 3.5% down payment, while conventional loans have a minimum of 620.

Down payment

Unless you’re using a VA or USDA loan to finance your home, you’ll need a down payment. FHA and conventional loans have low down payment options, and funds can usually come from a gift. But you’ll need to document what funds you have for your down payment and where they came from, as well as how you plan to pay for any closing costs.

Debt-to-income ratio

Simply put, lenders want to make sure you’ll be able to afford your mortgage payments, so they’ll look at your debt obligations as a percentage of your income, a metric known as your debt-to-income ratio, or DTI ratio. Read more

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