Homeownership is a milestone to celebrate. Before you can open the door to your new life as a first-time homeowner, you’ll need to prepare for the home-buying process.
Home Affordability
There are a number of factors and calculations to consider while you are on your home-buying journey.
Debt to income ratio
Also known as DTI, it compares your monthly housing payment—including principal, interest, property taxes, insurance, and any applicable HOA dues—to your gross (pre‑tax) monthly income. Lenders use this ratio as a general starting point to assess your financial capacity to support a mortgage. Lower ratios are typically viewed more favorably, but borrowers may still qualify with higher DTIs when supported by strong compensating factors such as solid credit, stable income, cash reserves, or minimal other monthly debts. Different mortgage programs also provide flexibility around DTI requirements.
Bills
Along with your DTI, you want to have a realistic view of all your other monthly bills. Even if bookkeeping isn’t your strongest suit, you can go online with your bank and review past months’ statements in order to itemize your bills.
Down Payment
While a 20% down payment was once common, today’s mortgage market offers many safe, regulated loan options requiring far less. There are loan programs that allow qualified buyers to put down significantly less – often as little as 3-5% down. Modern lending focuses on a borrower’s ability to repay—such as income, credit, and financial stability—not a fixed down‑payment amount. While putting 20% down can reduce monthly payments and eliminate mortgage insurance, it is not required to buy responsibly.
Credit Score
Your credit score is a snapshot of how lenders assess your financial reliability. It was developed by credit agencies and is based on factors like your payment history, how much debt you have compared to available credit, and how you’ve managed credit over time. Scores generally fall into ranges from “poor” to “excellent” and help determine loan options and pricing. Because your finances change—balances go up or down, accounts open or close—your score can change too, which is why checking it periodically is a smart financial habit.
Checklist
Before you begin your home-buying journey, it is important to do some prep work so that you are aware of your options and then you can begin to seriously start shopping. Keep these points on the top of your checklist.
Insights for first-time homebuyers
Discover effective strategies to improve your credit score before buying a home. Learn how to build credit, reduce debt, and qualify for better mortgage rates.
Explore your loan options: fixed-rate, adjustable, jumbo, construction, and government-assisted. Unlock the door to possibility and find the mortgage that fits your finances.
You’ve done all the prep work and now you’re ready to make your move.
Make your offer and don’t be surprised if you have to go over the listing price. The housing market is incredibly competitive right now and bidding wars on properties are not unusual. With that said, remember what your budget is and the work you did figuring out your total cost of ownership (TCO) – the last thing you want is to find yourself overextended. Your dream home can quickly become a bad dream if you’re struggling to make payments.
Put our solutions to work for you. Contact us today.
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All of our home loan originators are registered with the Nationwide Mortgage Licensing System and Registry (NMLS System). To obtain the NMLS identification number of a Webster Bank Loan Officer, please call our Client Assistance Center at 800-325-2424. The NMLS identification number can be used to search the NMLS National Database to view their background information.
All loans are subject to credit approval.
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