Buying a home is a huge life milestone. If you have found yourself considering taking this big step, you may have found yourself thinking, “What do I need to qualify for a home mortgage?”
Knowing the minimum mortgage requirements before you start the home buying process can help make the process as smooth as possible, and it can also guide you in selecting the best mortgage option for your specific situation.
Some items to consider when qualifying for a home mortgage:
Down Payment
To qualify for a mortgage, the minimum down payment that you will need to make when purchasing the home can be at least three percent, but the most common down payment amount is 20 percent.
It is important to note that if you put down less than 20 percent on the home, you will be required to carry mortgage insurance (this protects the financial company you’re borrowing the money from in case you default on your mortgage payments). The mortgage insurance will cost between 0.15 and 1.95 percent of your loan amount each year in premiums. The higher your down payment and credit score, the lower your mortgage insurance cost.
To quickly figure out the monthly mortgage that you can afford after your down payment, use a tool like a mortgage calculator.
Employment and Income
Most lenders will require proof of employment and steady income for a defined period of time. Most commonly, lenders like to see steady employment and income for the past two years.
If you are self-employed or a contract worker, this will count towards employment history too.
Credit Score
In most cases, lenders set forth a minimum credit score that you must meet in order to qualify for a mortgage. For example, Fannie Mae or Freddie Mac require a minimum credit score of 620.
If you choose to finance your mortgage through a bank or credit union, there may be more flexibility in the minimum credit score requirements.
If your credit score is not currently high enough to qualify for a mortgage, there are a few things you can do to boost your credit score.
Depending on which lender you choose for your mortgage, they may set forth additional requirements for you to meet in order to be approved for the mortgage on the home you wish to purchase. For more information on our mortgage options, including options like our 15 or 30-year mortgages, contact us today.
Do you need help deciding which option is best for you? Let us know!
Let Camino help you. We want our members to find the best option that works for their needs. We offer many options for those looking to purchase or refinance a home. Please give us a call at 800-835-3400 to speak with one of our Member Advisors, or contact us for more information. NLMS ID 666196