Tips for millennial Boston condo buyers
Some millennials have accumulated less wealth than older generations, and they haven’t had as much time to build a strong credit history. To overcome these obstacles, it’s important to get your financial house in order.
Here are some tips to prep your finances for homeownership:
Work on your credit score. Solid credit history and higher credit score shows lenders you know how to manage debt. Work on improving your credit score by making on-time payments and keeping your spending in check.
Pay down your monthly debts. Another factor lenders look at is your debt-to-income (DTI) ratio, the percentage of your gross monthly income that goes toward recurring debts. Maximum DTI ratios vary by the loan program, however, so it’s a good idea to keep your total DTI ratio (which includes your monthly mortgage and all debt payments) at 36% or less.
Boost your savings. Whether you plan to buy a home next year or several years from now, you’ll need enough cash for a down payment and closing costs. Create separate savings account for your homebuying expenses, and make regular deposits each month so you’ll have a cushion when it’s time to make your home purchase.
Know your loan options. It can be a challenge to build credit quickly or come up with a significant down payment. But don’t stress — there are specific first-time homebuyer programs designed to make homeownership more affordable. For example, borrowers with a credit score as low as 580 and a down payment of only 3.5% may qualify for a Federal Housing Administration (FHA) loan. Plus, many local and state agencies offer down payment assistance programs to help bridge the gap between your savings and down payment expenses.