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5 Important Considerations to Financing Your Home

1) Financing Factors

Knowing the amount you can spend on your new home is the first thing to do. The four main factors that would affect the amount that you can borrow are the size of your down payment, credit score, debt-to-income ratio (DTI) and monthly maintenance expenses.
Down Payment.

The down payment which is usually 5% to 20% of the home’s purchase price is the amount of saved money that you already have to purchase your new house. In case you are getting a conforming loan and putting down less than 20%, you are probably required to get private mortgage insurance. This would protect the lender in case of default. An additional 2% to 5% of the purchase price is also needed to cover closing costs and other expenditures.

2) FICO Score

Also known as FICO score, credit score is based from the information found on your credit report. Every major credit bureau which includes TransUnion, Equifax and Experian generates a separate FICO score ranging from 350 to 850, and before you apply for a mortgage, you should review each one. Your credit reports include debt utilization percentage, length of credit history, types of credits, applications for new credit, and negative comments.

3) Debt-to-Income Ratio

The debt-to-income ratio, expressed as a percentage, is calculated by taking the monthly debt and dividing it by the gross monthly income.
Less than 36% of DTI can qualify for many mortgages. In fact, the lower your DTI, the greater the chance you can potentially borrow for your new house.

4) Maintenance Fees

Your monthly maintenance fees are consists of all of the expenses regarding the homeownership that are not factored into your interest payment and monthly principal.

5) Mortgage Interest Deduction

Moreover, another important factor to remember are the rules that govern mortgage interest deduction on your federal income taxes. 
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Moe Pourtaghi


"Nothing brings me more joy than seeing my buyers & sellers have success in their Real Estate endeavours. I hope you find the articles on my blog inspiring and educating in your ventures." - Moe Pourtaghi

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