Step 1: Can I Even Buy a Home?
Many people think homeownership is out of reach—but it’s more possible than you might imagine. You don’t need perfect credit, a six-figure job, or a huge down payment to start the process. You just need to understand a few basics and take the first step. This page is your foundation. It helps you see where you stand and what lenders are really looking for.
What You Need to Know
Lenders want to see that you have the ability to repay a loan. This usually means a steady income, some savings, and a history of paying bills on time. You don’t need to be debt-free or have all the answers. That’s what this guide is for.
What Lenders Look For:
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Income: Are you employed or self-employed with regular earnings?
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Savings: Even $2,500–$5,000 can help you get started.
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Credit Score: A number that shows if you usually pay bills on time
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DTI or Debt-to-Income Ratio: A comparison of how much you owe each month to how much you earn.
What's your Credit Score?
Your credit score is a number between 300 and 850 that shows how likely you are to repay debt. It’s built from your credit history, including how often you pay bills on time, how much debt you have, how long you’ve had credit, and more.
Lenders usually look at your score from one of the three major credit bureaus: Experian, Equifax, or TransUnion. Most use a system called FICO, but some may use VantageScore too. Both are similar in range and meaning.
Here's the Breakdown of the Scores
Can You Still Buy with a Low Score?
Yes! Having a credit score below 620 doesn’t mean you can’t buy a home. It just means you may need extra support or a specific loan program. Here are some examples:
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FHA Loans: These government-backed loans allow credit scores as low as 580 if you can put down 3.5%. Some lenders will even consider scores down to 500 with 10% down, although that’s less common.
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VA Loans: For eligible veterans, active-duty service members, and surviving spouses. These often require no down payment and have more flexible credit requirements.
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USDA Loans: For homes in rural areas. These also offer 0% down and flexible credit guidelines.
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Portfolio or Non-QM Loans: Some lenders offer special programs for buyers with lower credit if they can show strong income or large savings.
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If your score is below 620, you might pay a higher rate or need to show other strengths—like a low debt load or steady job history. But you’re not out of the game.
How Much Do I Need to Save?
Forget the myth of needing 20% down. Most first-time buyers put down much less:
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FHA: 3.5% down
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Conventional: as low as 3%
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VA and USDA: 0% down
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Many states and cities also offer down payment assistance (DPA) programs. These can be grants, forgivable loans, or deferred second mortgages that help cover your upfront costs.
And some lenders may offer zero-down options for first-time buyers with strong income and low debt—even if you aren’t eligible for VA or USDA. It’s worth asking!
Take Action:
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Check your credit score: You can do this for free at AnnualCreditReport.com or by using a free monitoring tool from your bank or credit card provider.
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Review your income and bills: Make a list of your monthly income and expenses. This helps you understand your debt-to-income ratio.
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Start a savings habit: Set a basic savings goal. Even saving $50–$100 a month can make a big difference over time.
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Research first-time buyer programs: Look for down payment assistance or grants in your state or city. Many offer help for buyers with modest incomes.
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Avoid new debt: Try not to open new credit cards or take out car loans while preparing to buy a home. This can lower your score or change your loan approval odds.
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Talk to a loan expert: A good loan officer can help you understand your unique situation and what programs fit best—even if you're not ready to apply yet.
Wrapping Up
You don’t need to have everything figured out to take the first step. Whether your credit needs work or your savings feel small, there are real paths forward. Buying a home for the first time isn’t about being perfect—it’s about being prepared. Now that you know where you stand and what lenders are looking for, you're ready to learn what a mortgage actually is and how it works.