Purchasing a Home with a Mortgage – Part 1 of 4

What Lenders Look For

So, you’ve created a S.M.A.R.T. goal for the type of house you want to buy, now you need a plan for how you’re going to acquire that property. You want to balance the house features you’re looking for with the housing expenses that fit your budget.

Think through the lens of the lender. Try to operate your finances as though the lender is looking over your shoulder with each financial decision you make.

Best practices in financial fitness include:

  • low credit balances
  • high bank account and/or savings account balances
  • debt-to-income ratio generally of 36% or less (described further in Pre-Approval Section)
  • consistent income for at least two years; W2 salary income is usually more consistent than self-employed income

NOTE: When buying a multi-family home, generally 75% of future rent collected is counted towards your debt-to-income ratio.


Mortgage Planning

When financing through a lender, you will need to work with a loan officer to be approved for a mortgage. A mortgage is a legal agreement between you and a lender where the lender agrees to lend you money to buy the house.

You will work with a loan officer to determine if you can get approved for a mortgage, and verify the monthly payment on your new house. Be prepared to share more financial information and supporting documents for any questions they may have, including:

  • Bank statements for all accounts
  • Federal and State tax returns
  • Pay stubs
  • Retirement account statements
  • all loan information including car loan, student loan, credit card statements etc.

Once you have a mortgage, the lender will hold a lien against the house until you complete making payments. A lien is a legal claim against the property that gives a lender the right to take the house if you fail to meet the requirements of the loan.


A Journey to Personal Financial Success

At Morgan Franklin Fellowship (MFF), we support the concept of financial freedom – by teaching participants how to save by paying themselves first, invest for their future and grow their net worth.

Learning how money works and how to talk about money with others are the first steps towards recognizing an individual’s lifelong financial goals. Our online programs, podcasts, blogs, and book reviews and resources are designed to help you learn the concepts, rules and vocabulary of money, finance and investing.

Becoming an MFF Fellow

Our Standards of Financial LiteracyLearning about money series is engaging, full of interesting information, and easy to navigate. Adapted from the National Standards for Personal Financial Education developed by the Council for Economic Education (CEE), this robust curriculum features six short lessons on such important topics as earning income, understanding the value of saving and using credit. When completed, this program lays the foundation for becoming an MFF Fellow.

Becoming an MFF Fellow is the ticket to access additional MFF programs and opportunities for mentoring, networking, internships and real-world opportunities. Hear from the MFF Fellow themselves on how these opportunities encourage them to continue their journey to personal financial success.

Learn More about Money

Begin the journey towards personal financial independence today. START LEARNING TODAY

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