1. Know Your Budget: Debt-to-Income Ratio (DTI)

Your debt-to-income ratio (DTI) is the percentage of your monthly income that goes toward paying debts, like credit cards, car loans, or student loans. To calculate this, add up your monthly debts and divide by your gross monthly income to estimate your DTI.

Why it’s important: Lenders use this number to assess how much home you can afford. Ideally, your DTI should be below 43% (including your future mortgage payment), but the lower the better.

2. Check (and Improve) Your Credit Score

Your credit score is a signal of how reliable of a borrower you are and plays a big role in the mortgage process. Most banks offer a free credit score check, enabling you to identify and act upon areas of improvement.  

Why it’s important: Your credit score impacts your mortgage eligibility and the interest rate you’ll receive. While some loan programs accept lower scores, higher scores often mean better terms.

3. Save for Your Down Payment

Your down payment is the portion of the home price you pay upfront. For a conventional loan, a standard down payment is around 20%, but first-time buyers often qualify for much lower down payments. There are also down payment assistance programs to help cover some of the costs.

Why it’s important: Your down payment affects your loan amount and monthly payments. Having some money saved upfront gives you more flexibility and makes you a stronger buyer.

4. Understand Your Loan Options

There are many types of mortgages available to meet different financial needs:

• Conventional Loans – Great for buyers with good credit and stable income.

• FHA Loans – Designed for lower credit scores and smaller down payments.

• VA Loans – For eligible veterans, service members, and spouses.

• First-Time Homebuyer Programs – Offer special terms, education, or assistance.

Why it’s important: Exploring your options ensures you’re choosing a loan that aligns with your credit profile, income level, and long-term goals.

5. Factor in the Total Cost of Homeownership

Owning a home includes more than just your mortgage payment. Other costs to plan for include property taxes, homeowners insurance, maintenance and repairs, utilities, and closing costs (typically 2–5% of the purchase price).

Why it’s important: Understanding the full picture ensures you're buying a home that fits your budget—today and for the future.

6. Get Pre-Approved for a Mortgage

Pre-approval is a process where a lender reviews your financial information and gives you a conditional loan amount. You’ll receive a letter you can use when shopping for homes.

Why it’s important: Getting pre-approved shows sellers that you’re a serious buyer and speeds up the process once you find the right home.