hand holding keysDuring these crazy times, you may be dreaming of owning a home.  If you are dreaming, you can start planning!  These 8 tips can help you get started.  Now is a great time to start working on a plan so that you can buy your first home.


  1. Develop a family budget. If you have trouble sticking to a budget, it may be because you are budgeting what you’d like to spend (instead of what you really spend).  Try to use receipts to create a budget for what you actually spent over the last month or two. One advantage of this approach is that it factors in unexpected expenses, such as car repairs, illnesses, etc., as well as predictable costs such as rent.


  1. Reduce your debt. Generally speaking, lenders look for a total debt load of no more than 36% to 40% of income. Since this figure includes your mortgage, which typically ranges between 25 percent and 28 percent of income, you need to get the rest of installment debt—car loans, student loans, revolving balances on credit cards—down to between 8 percent and 12% of your total income.


  1. Get a handle on expenses. You probably know how much you spend on rent and utilities, but little expenses add up. Try writing down everything you spend for one month. You’ll probably see some great ways to save.


  1. Increase your income. It may be necessary to take on a second, part-time job to get your income at a high-enough level to qualify for the home you want.  Talk to your lender about your specific situation and the best approach for your family.


  1. Save for a down payment. Although it’s possible to get a mortgage with only 3.5 percent down on an FHA loan or just 3 percent down on a conventional loan, you can usually get a better rate and a lower overall cost if you put down more. Shoot for saving a 20 percent down payment.  (VA Loans and USDA Rural Development Loans have zero-down programs, but you will still incur closing costs when purchasing a home, so make sure you have some money saved up.)


  1. Create a house fund. Don’t just plan on saving whatever’s left toward a down payment. Instead decide on a certain amount a month you want to save, then put it away as you pay your monthly bills.


  1. Keep your job. While you don’t need to be in the same job forever to qualify, having a job for less than two years may mean you have to pay a higher interest rate - or may even cause you to not be able to qualify for a mortgage.  However, if you were a student and have been on the job less than 2 years there could be an exception.


  1. Establish a good credit history. Get a credit card and make payments by the due date. Do the same for all your other bills. Pay off the entire balance promptly. Your credit score will affect the interest rate that you qualify for on your home loan.