First tip, start saving your money

for the down payment and closing costs. You will need at least 5% of the home purchase price for your down payment, and another 5-6% of the home purchase price for closing costs.

(Note: there are mortgage plans that have zero down and zero closing costs, but these type mortgage loans are very costly)

Set up a spending plan where you can set aside savings:

Link to our Budget Planning Module in our tool set

We have more information on full costs:
view our information on the full cost of a mortgage

How to increase your savings?
(links jump to our parent site at www.SayLending.com)

Establish a monthly budget:
download budget forms

Reduce your monthly costs:
view lowering your bills

Increase your income:
view income building ideas

Note that the IRS allows first-time home buyers to use retirement savings for purchasing their first home:

1. federal government programs: link to HUD
2. State or local government agencies: view your state
3. government agencies: FHA / VHA / RHA
4. employers and/or private foundations
5. family members donating a "gift":
   
   usually the mortgage lender requires a gift letter verifying that the gift is not a loan and that you do not have to repay it.

Depending on your financial status, you may qualify for mortgage loan products that require little or no down payment:

Link to our home mortgage center for more information about these individual mortgage loan products:

Review mortgage product: zero-down mortgages
Review mortgage product: government loans

This might be a good time to review mortgage loan options that are available:

review: fixed-rate mortgages
review: interest-only mortgage loans
review: adjustable rate mortgages
review: hybrid rate mortgages
review: balloons, RIMs, other types

Depending on the market, you might be able to afford a home mortgage if interest rates are low and dropping.

Keep your eye on the movement of interest rates and be ready to start the process your application if interest rates meet financial hurdles.

View how to monitor rates:
click here for mortgage interest rates

This will be a good time to run some numbers to see how much you can afford:
click here for mortgage calculators

You will need to establish good credit in order to qualify for home mortgage financing.

Topics covered:

• establishing good credit
• maintaining good credit
• repairing your credit
• checking your credit

Make sure that you have a clean credit report prior to submitting your mortgage application.

It will prevent delays and non-approvals. We have some valuable quick notes for review:

what's in your credit report
checking your credit report
repairing your credit report

Review mortgage loan products for individuals with less-than-good credit: click here for a-minus mortgage loans

• Note: the higher your credit score, the lower your interest rate. Lower interest rates may put you in the affordability range.

Lenders require mortgage applicants to be within certain "housing" and "debt-to-income" ratios.

Run your numbers:
Link to calculate your ratios

Some lenders will increase both the housing ratio and debt-to-income ratio for qualified applicants:
view getting qualified for a mortgage loan

Reduce your current debts

If you have too much debt — meaning your "debt-to-income" ratio is above the minimum threshold — you will need to reduce or consolidate your debts prior to submitting your mortgage application:

(links jump to our debt management module at: www.saylending.com)

Guides to reduce or consolidate: credit card debt
Guides to reduce or consolidate: personal loan debt
Guides to reduce or consolidate: student loan debt

Use the calculator below to estimate how much home you can afford.

Understand the mortgage loan process

Before you submit your mortgage application, review these steps about the mortgage lending process:

click here for our quick review: 12-step mortgage lending process