Before you start picking out your dream home, let’s do a quick check-up on your finances! Your home should fit nicely in your budget—kind of like a comfy pair of shoes. Don’t forget about extra costs like taxes, insurance, and fixing things up when needed. A good rule of thumb? Try to keep your house payment around 28-30% of what you make before taxes.

Besides your monthly house payment, you’ll need some extra cash for things like:

• Closing costs (about 2-5% of the home’s price)
• Down payment (usually 3-20%, depending on your loan)
• Reserves (emergency savings to make your monthly payments, just in case!)
• Earnest money (more buying power to you if your realtor recommends it)

Your credit score is like your grade for borrowing money— a higher score gets you a better interest rate! A score of 620 or above is best, but some loan programs allow scores as low as 500. Just remember, the lower the score, the more you’ll pay in interest and monthly payments.

Your Debt-to-Income (DTI) ratio is another important area—it’s the amount of debt you have compared to your income. Try to keep it at 36% or lower, but preferably not above 43%.

Feeling good about your money situation? Awesome! Now’s the time to get a mortgage pre-approval. This shows sellers you’re a serious buyer. You’ll need to gather some important papers, like:

• Recent pay stubs (1 month’s worth)
• W-2s or tax returns (for the past 2 years)
• Bank statements (last 2 months)
• Your address history (past 2 years)
• Your job info (past 2 years)