loan for first house: expert tips for smart borrowing

What lenders look for

Getting approved hinges on a clear picture of your finances. Lenders weigh your credit history, stable income, and debt-to-income ratio, alongside cash for a down payment and reserves. Aim to keep housing costs near 28 percent of gross income and total debts under 36 to 45 percent, depending on program.

• Build credit: Pay on time, reduce balances, avoid new debt before applying.
• Save strategically: Set aside funds for down payment, closing costs, and an emergency buffer.
• Document income: Gather W-2s, pay stubs, tax returns, and bank statements.
• Compare offers: Request standardized loan estimates from multiple lenders.
• Consider assistance: Look for grants or down payment programs in your area.

Choosing the right loan type

Fixed-rate loans offer predictable payments; adjustable-rate loans may start lower but can rise. Explore FHA, VA, or USDA options if you qualify, and weigh points, mortgage insurance, and term length. Preapproval and a rate lock can protect you while you shop.

Evaluate the total cost over time, not just the monthly payment. Leave room in your budget for maintenance and moving, and avoid stretching beyond what lets you sleep well at night.