It may be hard to imagine buying a home in California or anywhere else before turning 30. However, there are many tactics a person can employ to accomplish this goal. Ideally, a home buyer will aim to make a 20 percent down payment to avoid paying mortgage insurance. That would mean paying $50,000 upfront to purchase a $250,000 home, but the buyer doesn’t need to come up with that cash on his or her own.
Government assistance programs or gifts from family members may make it easier to cover that initial payment. One of the key metrics that a lender looks at when determining if a borrower qualifies for a home loan is his or her debt-to-income ratio. Lenders typically want individuals to have a DTI of 36 percent or less to be eligible for a loan. Borrowers can get under this limit by paying down credit card or student loan debt before applying.
Furthermore, borrowers should have a credit score of 660 or higher to get reasonable mortgage terms. When looking for a home, younger buyers may benefit from getting a mortgage with an adjustable rate. This can work to keep mortgage payments at an affordable level before moving from a starter home to a forever home. Adjustable loans typically have a fixed rate for seven years before rates start moving higher or lower.
Purchasing residential property may be beneficial for individuals in many ways. Specifically, it can be a way to create wealth and stability in a person’s life. However, there are many steps a person must take to buy a home. It may be in a buyer’s best interest to speak with an attorney or financial professional to ensure a smooth process.