Buying Your First House
Buying a house can be a simple process if you break it into steps.
First, have a good history of paying bills on time.
Second, determine what you can afford. Talk to a lender to prequalify for a loan. Banks typically say your housing payment (the monthly cost of your mortgage loan plus the monthly cost of your property insurance and property taxes) should be no more than 31 percent of your gross income (income before taxes are withheld). They also stipulate that you not have too much going out in other monthly payments, such as car payments, credit card payments or student loan payments. Your total payments for your housing payment and other monthly payments usually should be less than 43 percent of your gross income. For better loan rates and terms, use lower ratios, such as 26 for housing payment and 41 for total monthly payments. For more detail on the process, click here.
Want to try it out? Click here for an affordability calculator.
If you income isn’t too high, you could qualify for affordable housing help. The City of Bloomington HAND Department offers a home buying class whose income-eligible graduates can get down payment and closing cost grant funds. Click here for information. If you’re looking to purchase outside the City of Bloomington but in Monroe County, the United States Department of Agriculture’s Rural Development program can help. Click here for information.