Homeownership is not exclusive to high-income earners. The first step is to work with a lender and hash out the complex financial details.
Pre-qualification

1. Pick a loan term

Short-term loans can mean higher monthly payments but a lower total cost over the loan term. Long-term loans may mean lower monthly payments but greater interest payments over the term.

2. Pick an interest rate

Fixed-rate home loans are less risky because the interest rate remains the same throughout the loan term. Adjustable-rate loans can offer a lower initial interest rate but adjust to fluctuations in the market.

3. Pick a loan type

Conventional • Not guaranteed by the U.S. government • Conform to Fannie Mae and Freddie Mac (Fannie Mae and Freddie Mac are U.S.-sponsored mortgage securities dealers) • Less money on mortgage insurance, fewer steps to closing • $424,100 loan limit FHA • Guaranteed by the Federal Housing Authority • Option for first-time homebuyers • Available to lower credit borrowers • Available to borrowers with smaller down payments • Loan limits vary by county VA • Guaranteed by the U.S. Department of Veterans Affairs • Eligible veterans, service members, surviving spouses • No down payment required • No mortgage insurance • Capped closing costs USDA • Guaranteed by the U.S. Department of Agriculture • Designed for low- to moderate-income borrowers • Must meet property eligibility requirements • Up to 38-year loan term • No down payment required

4. Apply for loan estimate

• Name • Date of birth • Income • Employment history • Residence history • Social Security number

5. Check credit history

• Target score range 620-740+ • No foreclosures in last 7 years • No bankruptcy in last 4 years • No liens

6. Calculate debt-to-income ratio

Take into account: • Credit card debt • Student loans • Installment loans • Cosigned loans Medical debt is not considered
Pre-qualification approved

Steps to homeownership

A real estate broker can help find that affordable dream home. Closing costs should be considered.