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Step One

Find out what you can afford

Step Three

Get pre-approved

Step Five

Make an offer
Step 1: Find out what you can afford


Start with saving

The first step to home ownership should ideally begin well before you purchase a home – saving. There are several things you may want to save for, including:

  • The down payment: As a general rule, a 20% down payment will ensure you receive the very best interest rate. However, you can apply for conventional home financing with as little as 3% percent down. If your down payment is less than 20%, you will be required to purchase private mortgage insurance (PMI).
  Buyer Tip

NIHFCU members are eligible for discounted private mortgage insurance rates.

  • Closing costs: Closing costs are the fees required to obtain a mortgage and transfer ownership of the home, such as attorney costs, an appraisal, title insurance, a recording fee, points, and a loan origination fee. You may have to pay the fees yourself, although sometimes the seller will pay them or you can have them financed (included in the mortgage).
  Buyer Tip

NIHFCU offers lender credits to assist with your closing costs.

  • Post purchase reserve funds: You may need to show the lender that you will have savings left over after you purchase the home. This provides assurance that the mortgage can be paid even if you are experiencing cash flow problems. At least three months worth of mortgage payments is a good amount to have in reserve.

  • Extras: If you plan to buy a fixer-upper, appliances, or new furniture, include these costs in your savings plan.
  Buyer Tip

Large deposits may require documentation prior to closing. If you expect a monetary gift from a family member, please speak with your loan specialist.

Review your credit

Your credit score and credit history will influence your mortgage interest rate and terms. Scores range from 300-850 – the higher, the better. A score in the mid-700s and above usually guarantees the best interest rates. You can obtain your current credit report from Experian, Equifax, and TransUnion for free once a year through the Annual Credit Report Request Service.

  Buyer Tip

Request a copy of your free credit report at least 60 days before you plan to apply for financing, as it can take some time to resolve issues.

If you are thinking of purchasing a home, keep these tips in mind:

  • Pay down debt and keep balances under 40% of the credit limit.
  • Don’t open new lines of credit.
  • Don’t purchase any big ticket items (car, furniture).
  • Follow this advice for any co-borrow as well.

Get prequalified

A prequalification can help estimate how much you can borrow and there’s no obligation to apply. The lender will typically prequalify you for a specific loan amount based on your estimated income, debt and assets. They can also assist with recommending the best loan options for your purchase needs. A credit score may not be required for a prequalification.

  Buyer Tip

NIHFCU can help you determine how much you can borrow. Get prequalified for free.

Questions or ready to get started? Complete our online form or call 855-203-4747 (toll-free).

Continue to Step 2: Select the right mortgage


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Some content © BALANCE Financial Fitness, Road to Homeownership. Used with permission.

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