How to Buy Property Before 30

There are pros and cons to purchasing property before turning 30. It also isn’t as hard as most people think! Once the minimum requirements are met, lenders hold the same standards for income, savings, and credit whether you’re in your 20s or 70s.

The benefits of purchasing a home early are related to taxes and investment perks. Most homeowners receive tax deductions, mortgage interest deductions, point deductions, and state & local tax deductions. However, there are also a few cons to owning a home, such as changes in interest rates, maintenance and upkeep costs, and market fluctuations when looking to sell. However, when the time comes to make the decision to purchase, consider a few factors before buying.

Credit score

Your credit score informs lenders about your personal finances. You won’t need spotless credit to qualify for a mortgage, but here are a few highlights to consider when lenders investigate credit –

  • 580 for FHA loans with 3.5% down
  • 580 to 620 for VA loans
  • 620 for conventional loans
  • 640 for USDA loans

Remember, when you check your credit score the scores you see in free credit monitoring apps tend to be higher than the FICO scores used by lenders.

Debt–to–income ratio (DTI)

Your existing debt affects your mortgage eligibility, and this ratio compares your monthly debt to your gross monthly income. To measure your DTI, add up your loan payments along with your minimum credit card payments, then divide by your gross monthly income. Multiply that number by 100 to see your DTI.

Down payment

To receive a home loan you will most likely need to have a down payment. For example, a 3% down payment on a $300,000 loan equals $9,000; to put 10% down you’d need $30,000.

If you have enough cash to exceed the minimum down payment requirement for your loan, you’re more likely to qualify for a lower mortgage rate which saves on long–term interest. It is important to consider all these factors before moving forward with a home purchase. Be sure to consider all the financial and other lifestyle implications.

If you are not in this position yet, not to worry! Now you know how to prepare when the time does comes to buy your first home.

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