Okay ― so you’ve scrimped and put away that down payment, you’ve taken mortgage advice and calculated your debt-to-income ratios. Your credit score is 620 or better, your job/income is stable, you know what your income level is compared to your area’s median household income, and… you’ve found that dream home!
Now it’s time to decide what type of mortgage lender will be best to get you into the home you want. It’s highly recommended that you obtain mortgage advice and are knowledgeable about what loan programs are available to you.
Let’s say that your debt-to-income ratios are 31% (front-end) and 41% (back-end), your credit score is 708, you have $5,500 for a down payment, you have steady job, and a current annual income of $45,000. If your dream home is $150,000 (and you have never served in the military), consider the following mortgage advice chart.
| Loan Type | Minimum Down
Payment |
Service/VET/
Widow/ Widower |
Area Median Household Income % | Credit Score | Loan Amt
(000) |
Front/Back Debt-to-
Income Ratio |
| FHA Mortgage | 3.5% | Y | N/A | 620 | $271 | 31/43 |
| VA Mortgage | 0 | Y | N/A | $417 | 41/ | |
| USDA Guaranteed
Mortgage |
0 | Y | 115 max | 620 | 29/41 | |
| USDA Direct
Mortgage |
0 | Y | 50-80 | 620 | 29/41 | |
| Conventional
Mortgage |
5% | Y | N/A | 620 | 28/36 |
As a piece of mortgage advice, note that you will need to check the limitations on loan amounts for your area. You must also look at your income compared to the area median household income. These requirements will come into play if you’re considering government-backed loans, such as FHA loans, VA loans, and USDA loans.
To qualify for a conventional loan, is best mortgage advice is to present strong debt-to-income ratios, steady employment and steady income, and a solid credit score. You can improve these factors by working on raising your credit score and paying down any outstanding debts.
If you are earning above the income level for a USDA loan, and you’re considering the purchase of a home that exceeds the loan limits for FHA/VA loans in your area, mortgage advice shows that you’ll need to maintain a 28% front-end debt-to-income ratio and a 36% back-end debt-to-income ratio (at most) for a conventional mortgage loan, and you cannot have filed for bankruptcy in the past 4 years.
When your credit score is excellent, you have a steady and predictable income, your debt-to-income ratios are good, and you have at least 5% of the home’s value as a down payment ― the wisest course of action is to recruit the services and advice of a reputable mortgage broker. A mortgage broker will have access to a multitude of lenders and they provide expert advice regarding the choices that will be most affordable and economical. Make sure the mortgage broker has a current, and valid state license, and that they are able to provide you with good references.