WEEK 2

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INCOME AND WORK HISTORY

  • In order to qualify for a mortgage, you need at least two (2) years of work history with the same company or same industry. If you worked for a company, you will need at least two (2) years of W-2s,  if you are self-employed or own a business, you can qualify with bank statements.
  • I would recommend having an income of at least $3,000 a month. (You may qualify with lower income this is only what we recommend) Lenders will look at what is called a debt-to-income ratio – which is the money you take home after all expenses and bills have been paid. This cannot be over 50% of what income you bring in per month. So, if you make $3000, you can’t bring under $1,500 home after expenses.
     
  • Use this site to calculate how much you can afford: fha.com/calculator payments. To efficiently budget, your total mortgage payment should not be over 30% of your monthly income. Example: If you make $3,000 a month, your monthly mortgage payment should not be over $900. Using this math, a person making $3000 could afford a mortgage of up to $125,000, depending on property taxes and terms offered.
  • Please make sure you have both a checking and a savings account, as you will be asked to show bank statements during your prequalifying stage. Most lenders will ask for up to three (3) months of statements to verify that your income is consistent and also to determine from where the funds for your down payment are coming. Look at these great bank accounts that offer money for signing up: nerdwallet.com/article/banking/best-bank-bonuses-promotions

HOMEWORK:

Calculate both the amount of money you make each month as well as the amount you spend each month. Create a solid budget. Use this free site to assist you: https://www.personalcapital.com/

By the end of this week, you should know exactly how much you take home per month and how much you spend.