Minimum Requirements for Residential Financing:
The most important step in getting Pre Approved is your debt to income ratio. Your credit will need to be pulled to determine your debt to income ratio. Your debt to income ratios will determine how much of a mortgage loan you’ll qualify to obtain.
A seller will not accept an offer without your Pre Approval Letter or Proof of Funds if your paying cash.
Listed below are typical requirements for residential financing:
1. 600 Credit Score (no late payments within 12 months) Best Score 640 & above
2. 3.5% DownPayment for FHA Financing
For example: If sales price = $300,000 Then Down Payment = $10,500
0% Downpayment for VA Financing (for Veterans with a VA Certificate)
3. Two Most recent Bank Statements, Current Pay stub, W-2 forms, last two years
4. Must be employed for at least 1 year (or in the same line of work if you’ve changed jobs within a year). Job must be in the same state your buying a home. If self employed, your tax returns need to confirm self employment for the last 2 yrs.
5. Last 2 years Filed Tax Returns.
6. Any B/K must be minimum 1 year from discharge for FHA mortgages.
7. Any prior foreclosure must be 1 year from when the previous bank sold the property, assuming your credit has been re established.
8. Documentation of the source of your down payment: investment or savings account statements showing at least two months’ history of ownership. If some of the funds were a gift, get a signed statement from the giver stating that the funds were a gift.
9. Documentation of name change, if recent
10. Proof of your identity (typically a drivers’ license or non-driver ID)
11. Social security number
12. Certificate of housing counseling or home buyer education, if you have one
Servicemembers or veterans should obtain a certificate of eligibility from the VA.
NOTE: A Pre Approval Letter is not a commitment to lend. It is simply an analysis of your credit worthiness & contingent upon verification of other documentation including but not limited to: proof of employment, income, filed tax return verification, rental history verification & a final underwriting review.
Contact us directly for commercial financing.
5 Things to Impact or Increase Your Credit Score:
1. Payment History (impacts 35% of your credit score)
Payment history accounts for how you have paid your bills in the past, what the balances are on your credit accounts, what type of credit you have & how many late payments have occurred.
2. Balances owed on your account (impacts 30% of your credit score)
Using more than 30% of your available balance lowers your score. For example, if your credit card limit is $1000, the debt on the card shouldn’t be more than $300 in an effort to keep your credit score from being negatively affected.
3. Length of credit history (impacts 15% of your credit score)
The longer you have accounts open the better.
4. New Credit (impacts 10% of your credit score)
5. Mix of Credit (impacts 10% of your credit score)
Mix credit are the types of diverse credit you have. Installment credit v/s revolving credit.
An example of installment credit is a mortgage or student loan. An example of revolving credit is credit cards.
This information can surely make an impact on whether you are pre approved for a loan.
Sign Up for your Free Credit Report & get tips on how to establish & increase your credit score.
Do you have credit disputes keeping you from buying a home? Get Legal Credit Repair for as little as $20 a month.
Credit Do’s & Don’ts:
- DO provide requested documentation promptly and in its entirety.
- DO continue living at your current residence.
- DO continue making your mortgage or rent payments.
- DO continue to use your credit as normal.
- DO keep working at your current employer.
- DO keep your same insurance company.
- DO stay current on all existing accounts.
- DON’T change your employment or marital status.
- DON’T make any major purchases (car, furniture, jewelry, etc.).
- DON’T change bank accounts.
- DON’T make any large cash deposits into your bank accounts.
- DON’T transfer any balances from one account to another.
- DON’T close any credit card accounts.
- DON’T consolidate your debt onto one or two credit cards.
- DON’T apply for new credit or open a new credit card.
- DON’T max out or overcharge on your credit card accounts.
- DON’T take out a new loan or co-sign on a loan.
- DON’T pay off any loans or credit cards, charge offs, or collections without discussing it with us first.
- DON’T finance any elective medical procedure.
- DON’T join a new fitness club.
- DON’T open a new cellular phone account.
- DON’T start any home improvement projects.
- DON’T have your credit pulled or dispute any information on your credit report during the loan process.
The Cost of Renting v/s Buying
There are a few Downpayment Assistance Programs below. However, they are income sensitive & all have limited annual funding, so be prepared to pay your downpayment in the event the program can’t fund your downpayment. Pre – approval is key in determining your eligibility for any program.
Downpayment Assistance Programs
American Dream DP Initiative
Dekalb County First Time Buyers Program
Fulton County Home Ownership Program
Gwinnett County Homestretch
North Carolina DPA
South Carolina DPA
Downpayment Assistance for homes within the Atlanta city limits
Atlanta Beltine Program
Home Atlanta 4.0
AAHOP Atlanta Affordable Homeownership Program
Once you decide to become a customer of Diamond Realty Brokers, we will guide you throughout the Pre Approval process.
The first step to home ownership is getting pre-approved by a lender before you shop for home. This will help determine a target price range that is suitable for you. This needs to be done about 45 days before you anticipate closing on a new home. In Atlanta real estate, homes can go under contract within 30 – 45 days if the property is priced average. If the property is priced very well, you could expect the property to go under contract within days from being listed. Once we have your approval letter from your lender, we then schedule property showings. Please note your pre approval letter from your lender is active for about 45 days, if we don’t contract on a property within 45 days you’ll need to get pre approved again. This is mainly because the lender will need to make sure there hasn’t been any changes to your income, employment & credit profile.
Choose a lender that is right for you. If you can’t find a lender, our lender partners provide FHA, VA & conventional home loan mortgages. FHA requires a 3.5% downpayment on the purchase of homes other than hud homes. For example, if the purchase price of your home is $300,000 multiply by 3.5% which equals $10,500 downpayment.
The downpayment does not include closing cost. The downpayment is the amount required from you by your lender, in an effort for them to fund the balance.
The closing cost are fees charged by the lender to you, in order to package & close your loan. Although the seller often assist in helping buyers pay a percentage of their closing cost, it is not a requirement of the seller. Your lender can give you an estimate of your closing cost prior to closing.
Buyer Frequently Asked Questions
More Home Buying Tips
Sign Up for your Free Credit Report & Get tips on how to establish credit
Download Your Home Loan Tool Kit – Consumer Protection Bureau
Ready to Own a Property? Complete the Pre Qualification Form: