A recent study by our friends at Fannie Mae shows that Home Buyers did not know the answer to these 3 important questions:
1.) What is the minimum down payment for a home?
2.) What is the minimum FICO (credit) score required to qualify for a mortgage?
3.) What is the Maximum Back-End DTI Ratio?
Many people were unsure how to answer these questions which is probably why a great number of people mistakenly think they dont qualify for a mortgage or cant afford to buy a home. According to Fannie Mae, the minimum Down Payment required is only 3%, and the minimum Credit Score to qualify for a mortgage is 620, which is a pretty average number. And what the heck does DTI mean anyway??? DTI stands for Debt To Income ratio. That is the amount of money you pay out to debt each month compared to the amount of income you bring in each month. So a maximum DTI of 45% means you can’t have more than 45% of your income go toward debt of all kinds including your mortgage. That way you won’t have to make a choice between food with your meals or paying the mortgage.
It is always important to arm yourself with knowledge before diving into any adventure!