what financial requirements must you have when purchasing a house?

Answer 1

There are three main factors that lending companies and banks look at.

1. Debt ot income ratio: This is simply how much you have in monthly bills compared to your income. Most lenders like to see you retain at least 50% of your income after bills are paid.

2. Credit score: Most lenders like to see scores in the high 600 range or higher. The higher the score, the better off you will be.

3. Loan to Value: This is how much you are borrowing compared to the sales price or the appraised value of the home. The more down payment you have the better interest rate you will get. If you are looking for 100% financing (no down payment) then your loan to value is 100%. The higher the LTV, the higher your interest rate will be even with the highest credit score.

There are several other factors of course but these three are the main ones. The most important thing to do is research. A general rough rule of thumb I teach my loan officer is $700 for every $100,000 you borrow. This will give you a ballpark figure as to how much your mortgage payments will be.

The best case scenaio is to fully document your income. This generally get you the best rates. Contact a good mortgage broker or if you have good credit, try your bank or credit union. Provide them with your last 2 years w-2's, a recent paystub, 3 months worth of bank statements and a loan application. With this information, a good loan officer should be able to tell you what you qualify for.

Be careful, you may get lots of bad advise. Generally you want to talk to lenders about financing and not real estate agents. They are useful when buying or selling a home but they are not lenders and most do not have the know how. I see this all the time. Direct lenders can be a better way to go if you have good credit and can meet all guideline requirements but you are limited to the programs that lender can offer you. Brokers can get you very low rates but the upfront fees tend to be higher. However, if the interest rate is lower, that will save you much more money over the course of the loan.

Hope this helps.

Answer 2

You have to look like you have the ability to pay for it. I know that sounds very vague, but it depends on the cost of the house and on your financial situation.

If you're getting a mortgage, you need a reasonably decent credit rating. A down payment is a good thing to have - while sometimes you can buy a house without one, it'll probably end up costing you more for financing.

Answer 3

it depends on what price range you're in, start with having a Direct Mortg. Lender (one who "funds loans in house") run your credit.

It starts with your credit score. Then talk to them about your income. Do you make a paycheck every week or are you on a commission type of income. You may not need to have a down payment, if your credit score is high enough & you can verify your income you may qualify for a $0 down program.

Answer 4

That depends on how large of a loan you are looking for. Usually they go by these methods.

Your gross (pre-taxes) monthly salary must be greater than 28% of the sum of the monthly mortgage and monthly tax payments.
Your gross (pre-taxes) monthly salary must be greater than 35% of the sum of the monthly mortgage, monthly tax and other monthly debt payments.

You must not have filed for bankruptcy in 3 years and be able to provide check stubs and bank statements (if avavlible).

Answer 5

2 years in the same profession (or now working in a field of previous study)
sufficient documentable funds to close
acceptable credit score (or alternative credit history, if applicable) for the chosen loan program
acceptable payment to income and debt to income ratios
sufficient cash reserve (if required per program guidelines)