If you feel stuck in the cycle of renting, wondering if you’ll ever be financially ready to buy a home, you’re not alone. Rising housing costs, student loan debt, and the general cost of living can make homeownership seem out of reach. But what if buying a home was more attainable than you think? Let’s tackle two of the most common homeownership myths and uncover the truths that could bring you closer to owning your dream home!
Myth #1: “I Have Student Loans, So I Can’t Qualify for a Mortgage”
Student loan debt is a reality for millions of Americans, and many believe they must wait until their loans are fully paid off before considering homeownership. Good news: That’s not always the case! One of the key factors lenders evaluate when approving a mortgage is your debt-to-income ratio (DTI), not just the total amount of debt you owe.
How DTI Works
DTI is calculated by dividing your total monthly debt payments by your gross monthly income (before taxes). For example, let’s look at the below figures:
- Student Loan: $500/month
- Rent: $1,000/month
- Car Payment: $300/month
- Total Monthly Debt: $1,800
- Gross Monthly Income: $5,000
- DTI Calculation: $1,800 ÷ $5,000 = 36%
DTI requirements will vary by lender and loan programs, so it is best to speak to your lender to discuss an ideal DTI for your unique financial circumstances.
*This example is for illustrative purposes only. For specific questions regarding your DTI and qualifying for a home loan, please speak to your Loan Team.
Myth #2: “I Need 20% Down to Buy a Home”
Another major misconception is that you need to save a huge down-payment before buying a home. While putting 20% down may help you avoid mortgage insurance, it’s not a requirement for most loan programs.
- VA Loans – Some VA loans may get you into a home for as little as Zero percent down, plus closing costs, for qualified buyers.
- FHA Loans – Some FHA loans may require as little as 3.5% down, plus closing costs, for qualified buyers.
- Conventional Loans – Some allow as little as 3% down for qualified buyers.
Additionally, there may be local down-payment assistance programs available in your area, as well as options to source your down-payment from gift funds from qualifying family members. Not all loan programs and down payment assistance opportunities are available in all areas or to all consumers.
If student loan debt or saving for a large down-payment have been holding you back from buying a home, it’s time to reconsider. There may be loan programs, financial strategies, and new construction incentives that could make homeownership possible for you sooner than you think! Not all programs, interest rates or loan types may be available, restrictions may apply.
Want to explore your options? Visit your nearest PulteGroup Sales Center and ask to speak with a licensed Pulte Mortgage Financing Advisor today!
