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Your Step-By-Step Path To Buying a Home

Buying a home doesn’t have to feel overwhelming. This simple Homebuying Guide walks you through everything you need to know — from setting your budget and understanding credit to choosing the right loan program and preparing for closing. No confusing jargon, no complicated math — just clear steps that help you feel confident.
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1

Start With Your Budget

Before you look at homes, start with your budget. The key number lenders use is your Debt-To-Income (DTI) Ratio — the percentage of your monthly income that goes toward housing and other debts.

What counts as debt?

  • Mortgage payment (principal, interest, taxes, insurance, PMI, HOA)

  • Credit cards
  • Student loans
  • Court-ordered payments
  • Auto loans
  • Personal loans
A comfortable DTI for most buyers is 40%–45%, though some programs allow higher.
To estimate your max monthly payment:
Gross Monthly Income × 0.45 = Safe Housing Budget
Pro Tip: Paying off one or two small debts can increase your approval amount more than increasing your down payment.
2

Check Your Credit

Your credit score and history play a major role in your mortgage approval and interest rate.
  • Credit score (based on payment history, balances, credit mix, and inquiries)
  • Monthly credit obligations

  • Public records (bankruptcies, foreclosures, major judgments)

Typical minimum score ranges:

  • FHA 580+
  • Conventional: 620+
  • VA: 620+ (varies)
  • Jumbo: 680+
Higher scores usually mean lower rates, lower PMI, and more flexible loan options.
Pro Tip: A lender’s full credit pull (tri-merge report) is far more accurate than the score in your banking app.
3

Understand Your Income

Not all income is counted the same way in a mortgage application. Lenders need income that is stable, documentable, and likely to continue

Income That Counts:

  • W-2 / Salaried: Base income counts fully
  • Hourly: Based on current schedule + historical average
  • Overtime / Bonus / Commission: Averaged over 24 months
  • Self-Employed: Based on tax returns, business profit, and add-backs
  • Fixed Income: Social Security, pension, long-term disability
  • Rental Income: Based on leases or tax returns (often 75% of rent counts)
Income that usually does not count: short-term gig earnings, temporary unemployment, undocumented cash income.

Pro Tip: Provide 2 years of tax returns + W-2s/1099s + recent pay stubs for the most accurate pre-approval.

4

Plan Your Down Payment

Your down payment can be as little as 0% depending on your loan program.

Common down payment requirements:

VA Loans:
  • VA Loans: 0% down
  • USDA Loans: 0% down (eligible areas)
  • FHA Loans: 3.5% down
  • Conventional Loans: 3–5% down
  • Jumbo Loans: 10%+ down

Accepted down payment sources:

  • Personal savings
  • Retirement accounts (401k/IRA loans or withdrawals)

  • Gift funds from family
  • Equity from selling your home
  • Down payment assistance programs (DPA)
You don’t always need 20%. In many markets, waiting to save 20% can cost more than buying now with 5–10%
5

Know Your Monthly Payment

Your mortgage payment includes more than just principal and interest. A full monthly payment typically includes:
  • Principal & Interest

  • Property Taxes
  • Homeowners Insurance
  • Private Mortgage Insurance (PMI)

  • HOA Fees  (if applicable)
Many online calculators don’t include taxes, insurance, or PMI — which means the payment shown is much lower than reality.
Pro Tip: Ask for a real lender estimate that includes all payment components so you know exactly what to expect.
6

Compare Loan Programs

The best mortgage is the one that fits your goals, timeline, and financial profile.

FHA Loans

  • 3.5% down
  • Flexible credit requirements
  • Great for first-time buyers

Conventional Loans

  • 3–5% down

  • PMI can cancel once you reach 20% equity
  • Better rates for strong credit

VA Loans

  • 0% down

  • No monthly PMI
  • Powerful benefit for eligible Veterans

Jumbo Loans

  • Higher loan limits


  • Typically need stronger credit and larger down payment

Non-QM Loans

  • Bank statement loans


  • Investor DSCR loans
  • Flexible programs not based on tax returns
7

The 10-Step Homebuying Process

Simple, clear, and stress-free when you follow the right steps.

Talk to
a lender

Write
offers

Sign Closing Document

Get Pre
Approved

Open
Escrow

Get your
keys

Hire a real estate agent


Order inspection & appraisal


Start home
shopping

Lock Your
Rate

8

How To Stay Qualified While You Shop

One wrong move can delay or deny your loan — so check with your lender before making big financial changes.

Do's

  • Keep deposits stable
  • Pay bills on time
  • Respond quickly to document reque
  • Keep your job/hours stable

Dont's

  • Buy a car
  • Open new credit cards
  • Move money between accounts without explanation
  • Make large cash deposits
FAQs

Frequently
Asked Questions

Still have a question?

JLLendingTeam: A collaborative group specializing in providing tailored lending solutions and financial support for clients.
Send Email
How much house can I afford?
Most buyers stay in the 40–45% DTI range for comfort.
No — most programs allow 0–5% down.
Typically 30–45 days once under contract.
Usually 2–3% of the purchase price including lender, title, escrow, and prepaid taxes/insurance.

Still have a question?

JLLendingTeam: A collaborative group specializing in providing tailored lending solutions and financial support for clients.
Send Email
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