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Qualifying For A Loan For Your First Home

If you have a credit score of 580 or more, you might qualify for a first time home loan. Call (303) 222-0027 or e-mail contact@firsttimehomebuyersdenverco.com for a free list of programs.

To be able to qualify for a loan for your first home, you need to be able to show lenders that you’re capable of handling credit and that you make enough money to afford the condo, loft, townhome, or house that you want to buy.

Below are some general criteria for qualifying for a first time home buyer loan.

Income Required To Qualify For A First Time Home Loan
In general, mortgage brokers and lenders will require that your debt-to-income ratio be in the 40%-45% range. The income is your gross monthly income (before taxes) and the debt is all of your monthly payments on outstanding debt (student loans, credit card debt, car loan, etc).

Let’s look at a few examples…

Earning $30,000 Per Year With $0 Per Month In Other Debt Payments
If you make $30,000 per year, that equals $2,500 per month, gross pay. At a debt-to-income ratio of 41%, mortgage companies and lenders would allow you to have $1,025 in payments per month. If you’re not paying any other debt obligations (car loan, credit cards, etc.), this would leave you the entire $1,025 for your house payment*.

Earning $42,000 Per Year With $200 Per Month In Other Debt Payments
If you make $42,000 per year, that equals $3,500 per month, gross pay. At a debt-to-income ratio of 41%, mortgage companies and lenders would allow you to have $1,435 in payments per month. If you’re already paying $200 to other debt obligations (car loan, credit cards, etc.), this would leave you $1,235 for your house payment*.

Earning $50,000 Per Year With $750 Per Month In Other Debt Payments
If you make $50,000 per year, that equals $4,166 per month, gross pay. At a debt-to-income ratio of 41%, mortgage companies and lenders would allow you to have $1,709 in payments per month. If you’re already paying $750 to other debt obligations (car loan, credit cards, etc.), this would leave you $958 for your house payment*.

Earning $60,000 Per Year With $500 Per Month In Other Debt Payments
If you make $60,000 per year, that equals $5,000 per month, gross pay. At a debt-to-income ratio of 41%, mortgage companies and lenders would allow you to have $2,050 in payments per month. If you’re already paying $500 to other debt obligations (car loan, credit cards, etc.), this would leave you $,1550 for your house payment*.

*It’s important to note that your “house payment,” includes: principal and interest on your home loan, real estate property taxes, mortgage insurance, homeowners insurance, and homeowners association (HOA) fees. HOA fees typically only apply if you’re buying a condo, loft, or townhouse.

Credit Score Required For A First Time Home Loan
Most mortgage brokers and lenders require that you have a credit score of 620 or higher (although some approve buyers with credits scores as low as 580). A higher credit score (750 or above) may qualify you for a first time home loan with a lower interest rate.  If your score is lower, we can discuss the ways you can raise your credit score.

Financial Documentation Required For A First Time Home LoanTo be able to qualify for a first time home loan, you’ll need to provide financial documentation to your mortgage company, including:

For additional information on qualifying for a loan for your first home or to start looking for a home, please call (303) 222-0027, or e-mail contact@firsttimehomebuyersdenverco.com.

Please note: In a free consultation, we can help you determine how much loan you’ll be able to afford. From there, we can pull listings of properties in your price range, in your favorite parts of the Denver metro area.