1. You earn a moderate income

Your salary definitely matters when determining your ability to own a home. But, you don’t necessarily have to have a six-figure salary in order to own a home. If your mortgage will take up 28% or less of your monthly income, you can definitely think about home ownership! When calculating your mortgage amount, don’t forget to include HOA fees, taxes, insurance, and possible maintenance fees.

2. You have some money in the bank for a down payment

The classic down payment amount that is thrown around is 20%, however, that number isn’t an absolute. A 20% down payment is what you need in order to avoid paying private mortgage insurance (PMI). But many people aren’t able to afford that amount and there are other mortgage routes to take if you fall in that category. You’ll definitely want to get in contact with a lender who can help you figure out if you qualify for a VA loan, FHA loan, or conventional loan; all of which may require less than a 3.5% down payment. 

3. You have a small amount of debt

Some debt is actually good when a mortgage lender is evaluating your finances. Car loans and credit cards, when paid on time, show a lender you are a reliable borrower. And while some debt is okay when purchasing a home, you don’t want to have too much either. Lenders are bound by certain laws and can legally offer only loans of up to 35% of a person’s monthly income. 

4. You have a credit score of at least 580

The average credit score in America is currently 695, with an excellent score being 720+. Lenders prefer a credit score of at least 700 but, don’t get too discouraged if your score falls below the average threshold. You may still be able to qualify for a mortgage as long as it’s at least 580 and you have enough money for the mortgage and other debt payments. There are certain loans, such as an FHA loan, that allow people with a lower credit score to fulfill their dream of home ownership!

5. You are open to a starter home

First-time home buyers often get stuck in the idea that they have to find the perfect home that will last them for years and years to come. With that in mind, finding a home may be very difficult. Conversely, if you recognize that you can start in a less  desirable home and work your way up, it should be fairly simple to find an affordable home. You will likely build equity in your home after just a few years and will then be able to upgrade to a home that better fits your needs and lifestyle.

So, there you have it! Home ownership may actually be more within reach than you think. Reach out to a real estate agent to find out just how much you are able to afford in your area!