Today, buyers might reduce their downpayment even more by exploring the wide range of affordable downpayment alternatives available at Countrywide. In addition, many cities offer special downpayment assistance programs, or silent seconds, to help first-time home buyers with the downpayment. Most lenders prefer that long-term debt range from 33 to 38 percent of monthly gross income. Long-term debt includes loan or credit card payments, taxes, and other debts that will take more than ten months to pay off. Making extra payments or paying off credit card balances can help reduce debt.
Prospective buyers can also prepare to purchase a home by examining their credit record.
However, many lenders will overlook one or two problems on a credit report as exceptions in a buyer's credit history. According to Anderson, the first and most important step before shopping for a home is to get pre-approved. Pre-approval verifies a borrower's credit information and determines how much they can afford to spend on a home. With a pre-approval, the lender commits to provide financing contingent on a satisfactory property appraisal. It also improves their bargaining power with a seller by showing that they are serious and eager buyers.