Have you been looking into Winston Salem real estate agents? Are you wanting to take your first step onto the property ladder? If so, you’ve got to make sure you’ve got your finances in order first.

Figure out what you need

• The standard amount for a down payment on a home loan is 20% of a property’s asking price. That might seem like a lot, but those who can pay it benefit from not having to pay for private mortgage insurance (PMI) and also having lower monthly mortgage payments going forward.
• Those who can’t or don’t want to pay 20% are in luck. That number may be the standard, but it’s not the only option. The minimum down payment for a conventional loan is 3%, although this does require factoring PMI into your costs.
• Aside from conventional loans, there are other loans types worth investigating: Federal Housing Administration (FHA) loans require a down payment of 3.5% provided the borrower has a 580 credit score and pays PMI; Conventional 97 loans require a 3% down payment but necessitate a $500,000 lending limit, a fixed rate mortgage, and the purchase of a single-unit home; Homeready loans also require a 3% down payment and factor in the income of all members of a household instead of just the primary borrower; U.S. Department of Agriculture (USDA) loans require no down payment at all but are only available to those buying homes in certain rural areas; US Department of Veteran Affairs (VA) loans also require no down payment but are only available to members of the US Army, Navy, Air Force, Coast Guard, and National Guard.
• Not sure what types of loans you qualify for? Make an appointment with an independent loan originator (as opposed to a mortgage loan officer) to better get an idea what options are available to you.

Figure out what you have

• Once you know how much you’ll need, compare that number to how much you have in your savings. If there’s still a considerable distance between the two, don’t fret. There are many ways to bridge that gap.
• In addition to your regular income, don’t forget to factor in other money sources and windfalls you may have, such as inheritances, gifts, bonuses, or tax refunds.
• Create a timeline for how soon you want to be able to make your down payment. Having a specific time frame in mind will help you determine how much you need to save and how best to do it. Just remember to be realistic.
• If you don’t have one already, open up a savings account with your bank. Not only can this help you accrue compound interest, you can also set it up so that a portion of every paycheck is automatically transferred into it, removing a lot of work and temptation.
• The biggest obstacle to buying a house is having debt. In addition to eating into your savings, debt lowers your credit score, reducing the amount of loan options you have access to. If you want to become a homeowner, seek ways of shrinking your debt first.

If math isn’t your strong suit, an online house payment calculator can crunch the numbers for you. Simply put in your income, how much you have saved, and what your monthly expenses are, and it will estimate how much you can currently afford to put toward a new house.