Break through Barriers: Your Guide to Approaching Homeownership with Confidence
Homeownership is about more than a place to call home. It’s a wealth-building tool and one of the most important ways to build long-term stability. However, the journey is not always a simple one, especially for those starting the process for the first time. The good news is that with the right tools, resources, and support, homeownership is within reach.
You Got This: Preparing Your Finances
A great first step to prepare for homeownership is strengthening your finances. Mortgage lenders will review several factors when determining your qualifications for a mortgage, including your credit score, debt-to-income ratio (DTI), and planned down payment.
Your credit score helps lenders determine what your loan terms will be. You don’t need a perfect score to qualify for a mortgage – some loans only require a score of 620 – but the higher your score, the better your chances are of securing a lower interest rate. Even small improvements can make a difference over the life of your loan, so understanding how your score works can help you take actionable steps to improve it.
Your DTI indicates how much debt you have compared to your income level. The lower your DTI, the more likely you are to qualify for more favorable loan terms and rates. To improve your DTI, start by paying down credit cards and loans. It’s also important to avoid taking on additional debt during the homebuying process, like purchasing a new car.
A common misconception in the homebuying process is that you need a 20% down payment. This can feel like a barrier for many, but it’s actually not true. There are many low-down-payment options available for homebuyers, including FHA, VA, and Chase DreaMaker Mortgage™, which requires as little as 3% down. These programs may also offer more flexible credit guidelines to help you achieve homeownership.
Saving Isn’t Sacrifice: Smart Budgeting
Even as interest rates decline, affordability remains a top concern for buyers. That’s why creating a budget is important. Tools like an affordability calculator can help you determine how much house you can afford or how much you need to save.
Keep in mind that there are additional costs in the homebuying process aside from the down payment. Closing costs can be 2–5% of the loan amount. These often include fees for services like an appraisal and inspection, which can help determine the home’s value and condition. Also consider moving expenses and setting aside cash reserves for future expenses, like home maintenance and repairs.
Buying a home is just the beginning; you also need to make sure you can afford to keep it. Design a budget with a savings plan to help you reach your goals while also living your life—don’t give up your lattes just yet if that’s your jam. You can even practice making mortgage payments—set aside what your future monthly mortgage payment might be to see how it fits with your budget.
Watching The Market: Focus On What You Can Control
It’s natural to keep an eye on interest rates, but the reality is that no one can perfectly time the market. Rates can shift daily, and waiting for the ‘right’ moment can be stressful and may cause you to miss out. What matters most is feeling confident about being financially prepared to take on the costs of homeownership.
If you need peace of mind knowing you’ve got a rate you can afford, programs like Chase Homebuyer Advantage™ with Lock and Shop can help. You can lock in a rate you are comfortable with as you search for a home, while keeping a one-time option to lower your rate if rates improve. It gives you more control by locking in your interest rate with no upfront fee, so you can focus on finding the right home and setting yourself up for long-term financial stability.
On Your Side: Get A Team Together
The best part is that you are not alone in the process; there are so many people who can help you achieve your goal of homeownership! Start by choosing a real estate agent who understands what you’re looking for and can help you navigate the homebuying process. Connect with a home lending professional who will walk you through loan options and help find a loan and rate that fits your needs.
They’ll be with you through the whole process from affordability assessments to preapproval and closing. You’ll also have a few other experts on your side, like an inspector and appraiser, to help ensure your new home is a good investment.
Every Step Counts: Celebrate the Journey
This process can be stressful, so prepare yourself emotionally. It might even feel a little like a rollercoaster of feelings—offers may fall through, rates may change, or timelines shift.
Stay focused on your goals—both big and small. In the short term, that might mean creating a new life in a home that’s just right for you. In the long term, it’s about building equity and financial stability. Along the way, remember to celebrate the milestones, like hitting a savings goal or improving your credit score. Those wins are part of the journey and the memories you’ll carry forward.
Ready to explore your path to homeownership? Visit Chase.com/afford to discover tools and resources to help you get started.
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For informational/educational purposes only: Views and strategies described in this article or provided via links may not be appropriate for everyone and are not intended as specific advice/recommendation for any business. Information has been obtained from sources believed to be reliable, but JPMorgan Chase & Co. or its affiliates and/or subsidiaries do not warrant its completeness or accuracy. The material is not intended to provide legal, tax, or financial advice or to indicate the availability or suitability of any JPMorgan Chase Bank, N.A. product or service. You should carefully consider your needs and objectives before making any decisions and consult the appropriate professional(s). Outlooks and past performance are not guarantees of future results. JPMorgan Chase & Co. and its affiliates are not responsible for, and do not provide or endorse third party products, services, or other content. See full disclosures at Chase.com/afford.
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