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Purchasing a home is a very exciting time, and being well advised will help you make sound decisions. Take this time to educate yourself about home purchasing and the mortgage process. Throughout this website, you will come across information that will help you with the purchase a home and finance it at the same time.

AM I READY TO BUY AND FINANCE A HOME? 

When buying a home for the first time, you need to decide whether it makes financial sense for you to buy right now or if you are better off renting. Home financing gives you many advantages while you are searching for a financing company. You’ll be able to build equity when you gradually pay your mortgage. A common perception is that monthly mortgage payments are more expensive than paying rent. But, in some cases, mortgage payments can be even less than rent.

INDICATIONS THAT YOU’RE READY FOR A MORTGAGE LOAN

Minimal Debt – You have credit card debt and car payments under control to make sure you can cover other expenses related to being a homeowner, such as property tax, homeowners’ insurance, repairs and maintenance, and furnishings.

Good Credit Score – Having a higher credit score allows you to qualify for a better interest rate, enjoy a lower monthly mortgage loan payment, and make owning a home attainable.

Steady and Rising Income – The longer you’ve been in a position, the more likely that your job will be viewed as steady enough to maintain homeownership when you obtain a home loan.

Adequate Savings – By having income set aside that is the equivalent of at least a year of monthly bills, you’ll be in a good position to buy a house.

Down Payment for a Home Loan – You should have at least a 10 percent down payment saved up outside of your savings and emergency funds.

HOW MUCH HOUSE CAN I FINANCE WITH A MORTGAGE LOAN?

The first step toward finding the right home loan is quickly computing your purchasing power and determining how much you can afford each month. Knowing this amount will allow you to focus on homes in your price range. You can find out how much you’re qualified to borrow by getting pre-approved for a home loan. Make sure you consider both the up-front and ongoing costs associated with purchasing a home.

In the end, you have the final say in what you’re comfortable spending on a home. A mortgage lender’s assessment is important, but ultimately, you’ll need to take a look at your income, expenses, savings, and priorities to truly understand what will comfortably fit within your budget.

FACTORS THAT INFLUENCE THE AMOUNT YOU CAN BORROW

While every person’s situation is different (and some home loans may have different guidelines), here are the generally recommended guidelines based on your gross monthly income (that’s before taxes):

MORTGAGE RATIO

Your mortgage payment should be 28% or less.

DTI

Your debt-to-income ratio should be 36% or less.*

HOUSING EXPENSES

Your housing expenses should be 29% or less.**

SAVINGS

You should have several months of savings.

* The debt-to-income (DTI) ratio should be less than 36% to ensure that you have some extra in your monthly spending. A lower DTI helps you to pre-qualify for a mortgage loan.  ** This is for things like insurance, taxes, maintenance, and repairs.

WE’RE HERE FOR YOU

We take pride in providing you with excellent service and appreciate the opportunity to assist you with all your real estate and mortgage needs.

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NMLS# 399264
CalBRE# 01448128

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Orange County Office 
(714) 386-1286
[email protected]
17155 Newhope St. Suite H
Fountain Valley, CA 92708