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Ready to buy a home?

Owning a home can give you 

stability and security, and protection 

from rising housing costs. 

Homeowners get tax benefits. And when you finish 

your mortgage payments, you’ll own a home that you 

can sell or pass along to loved ones after your death.

But it’s a big responsibility. When you own a home, 

you pay for repairs, along with any property taxes, 

insurance, and homeowners association dues that 

apply. If you want to move, you normally try to sell 

your home first.

If you want to buy a home, start 

getting ready

If you can answer “yes” to the questions below, 

you’re probably ready to buy your own home:

§ Do you have at least two years of regular, 

steady income?

§ Is your income reliable?

§ Do you have good credit?

§ Do you have just a few long-term debts, 

like car payments?

§ Have you saved money for a down payment?

§ Can you pay a mortgage every month?

§ Can you pay other costs, like insurance and taxes?

§ Can you set aside money for other costs of home 

ownership, like closing costs, moving costs, new 

furniture, repairs, and home improvements?

Save a down payment

Most lenders won’t lend you the full price of a home. 

They want you to come up with some of the money 

yourself. That money is called a down payment.

It can be hard to save up a down payment. But a 

large down payment can help you get a mortgage 

and reduce the interest rate you pay.

The smallest down payment is usually 3.5 percent 

of the price of the home. Many mortgage lenders 

want you to put at least 5 percent down.

For example, imagine you want to buy a home 

worth $100,000:

§ A 3.5% down payment is $3,500

§ A 5% down payment is $5,000

§ A 20% down payment is $20,000

If you can’t afford a down payment of 20 percent, 

your lender may make you pay for mortgage 

insurance. That increases your monthly costs.
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Check your credit

To get a mortgage, you need good credit. For some 

loans, lenders want you to have a minimum credit 

score of 620, unless you have a large down payment. 

Visit AnnualCreditReport.com or use the automated 

phone system at 1-877-322-8228 to get a free copy 

of your credit report from the three nationwide 

credit reporting companies. You can receive a free 

credit report from each one, every 12 months.

Get ready to shop around for a 

home loan

Choosing the mortgage you’ll use to pay for your 

new home is an important decision. You can start 

by looking around for a network of people and 

information you trust to help you through the process. 

And, you can start gathering facts about your 

finances, so you’ll have them ready at your fingertips.

Tips for good credit

There are no secrets or shortcuts to building 

a strong credit score. Follow these tips:

§ Pay your bills on time, every time

§ Don’t even come close to “maxing out” 

your credit cards

§ Be cautious about closing accounts that 

show a long history of on-time payments

§ Apply only for credit that you need

More help is available

For resources, guidelines, and 

checklists that can help you, visit 

consumerfinance.gov/mortgage.