Some home buyers are indeed finding it harder than ever before to buy a home. The cost of homes has skyrocketed in many areas, and the dollar isn’t as valuable as it once was. You may think this means you have to rent forever, but the truth is that you may be closer to buying a home than you realize. Keep reading to learn more and then contact Berkshire Hathaway HomeServices if you need assistance finding the perfect home.
Begin by Educating Yourself on Your Credit Score
Before you start looking for the perfect house, it is wise to know financing options are available to you, such as how much of a mortgage you qualify for, how much of a down payment you will need, etc. Start by learning the minimum FICO score required by the type of lender you will be using then check your score to see if you qualify.
When considering how much money to put down, you will need to again consult with the type of lender you are considering. While 20% is generally the goal when making a down payment, not all lenders require this much. There are programs available that can help you with down payments as well.
How Much Money Do You Need to Make to Buy a Home?
Of course, the specific answer to this question will depend on the specifics of where you are looking to buy, how much of a down payment you have, and other factors. According to a recent study, the average household that rents has a median income of $37,500. Compare that to the $75,000 median income of the average homeowning household, and you can see that there is a significant difference.
However, remember that this is household income. If you are planning to buy by yourself and you make $37,500 or less, then you will likely have a hard time buying, unless you have a significant down payment. On the other hand, if you and your co-borrower each make just $37,500 each then your household income is likely enough to buy.
How Much Money Do You Really Have to Save?
Two-thirds of renters say that the most significant thing standing in the way of buying a home is a lack of a down payment. Consider that the national median home costs $229,000. If a person put 20% down on that, they would need $45,800 – and of course California properties are generally much more expensive than the national median.
The good news is that you do not necessarily have to put 20% down. Yes, doing so can reduce the overall costs – including private mortgage insurance. However, only about one-fifth of buyers put 20% down. More than half put down much less than 20%. Talk to a lender or Berkshire Hathaway HomeServices to find out what you are likely to need for a down payment.