With mortgage rates fluctuating, now might not seem like the perfect time to buy a home, but it’s an ideal time to prepare, especially for first-time homebuyers. 

Movement Mortgage recently shared helpful tips on FaithFi.com for those looking to enter the housing market. Here’s a breakdown of these critical steps to set you up for a successful and financially wise home purchase.

Step 1: Determine Your Budget—And Keep It Conservative

First things first, know what you can afford. It’s wise to set a sale price and monthly payment that’s less than the maximum a lender or loan calculator may suggest. Keeping a buffer in your budget allows for unexpected costs and helps you avoid financial strain. 

As Proverbs 21:20 says, “Precious treasure and oil are in a wise man’s dwelling, but a foolish man devours it.”

Step 2: Set a Savings Goal for Your Down Payment

While a 20% down payment isn’t always required, it has some major benefits:

• Reduces the loan amount
• Eliminates private mortgage insurance (PMI)
• It gives you enough equity to sell if unforeseen circumstances arise

If you can’t reach 20%, aim to save as close as possible for these advantages.

Step 3: Budget for Additional Costs

Beyond the down payment, remember incidental costs, like:

• Property and pest inspections
• Moving expenses
• Essential appliances (like a fridge or washer/dryer), if not provided by the seller

Planning for these helps avoid last-minute financial surprises.

Step 4: Check Your Credit

Most mortgage lenders prefer a credit score between 700 and 750, with 740+ often unlocking the best rates. Here’s how to optimize your score:

• Review your credit report and dispute any errors
• Pay down debts to keep balances below 30% of your available credit
• Avoid any new credit inquiries, as “hard pulls” can impact your score

Step 5: Lower Your Debt-to-Income (DTI) Ratio

Even with a great credit score, high debt levels could result in a mortgage denial. Try to reduce any debt you can, like paying off a car loan, to improve your DTI ratio and increase your mortgage eligibility.

Step 6: Maintain a Clear Paper Trail

Lenders will closely scrutinize your transaction history, so avoid moving money between accounts for at least three months before applying. Any large transfers could complicate the process, as lenders must verify that your assets are not borrowed. 

If you’re expecting a cash gift, consult a loan officer for guidance. Specific documentation may be needed to confirm that the money is a gift, not a loan.

Step 7: Pay Off Outstanding Tax Debts

If you owe back taxes and are on a payment plan, prioritize paying these off. Outstanding tax debts affect your DTI ratio and could lead to complications with lenders, as tax liens can take priority over other debts.

Step 8: Stay at Your Job

Lenders look for employment stability, so if you’re considering a job change, it’s best to hold off until after you buy the home. Having at least two years at your current job can reassure lenders and improve your chances of securing a mortgage.

Need More Help? Connect with Movement Mortgage

Movement Mortgage offers guidance for each step of the home-buying process, helping you make informed financial decisions. Additionally, they’re a faith-based company dedicated to philanthropic causes, having donated $377 million to educational and infrastructure projects in underserved communities. 

To learn more, visit Movement.com/faith.

These steps can help you confidently prepare for your first home purchase, ensuring you’re financially and practically ready when the time comes.

On Today’s Program, Rob Answers Listener Questions:

• I would appreciate your thoughts on tithing from my portfolio gains or income.
• Can you borrow from a long-term health insurance policy?
• I have $10,000 in a CD and am trying to decide whether to use it to pay down my debt.

Resources Mentioned:

• Movement Mortgage
• National Christian Foundation (NCF)
• Christian Credit Counselors
• Christian Healthcare Ministries (CHM)
• Look At The Sparrows: A 21-Day Devotional on Financial Fear and Anxiety
• Rich Toward God: A Study on the Parable of the Rich Fool
• Find a Certified Kingdom Advisor (CKA) or Certified Christian Financial Counselor (CertCFC)
• FaithFi App

Remember, you can call in to ask your questions every workday at (800) 525-7000. Faith & Finance is also available on Moody Radio Network and American Family Radio. You can also visit FaithFi.com to connect with our online community and partner with us as we help more people live as faithful stewards of God’s resources.

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