Getting a Mortgage When You Are Young

If you have been thinking about buying your first home, then you will be happy to know you are not alone. Many young people are buying instead of renting. One of the main benefits of owning a home is that you get to build equity in your home over the years. In addition to building equity, homeowners can also take advantage of tax breaks that help homeowners save a significant amount of money on taxes. Although owning a home can be rewarding, getting a mortgage when you are young can be extremely difficult. To improve your chances of getting approved, you should consider the tips discussed below.

Start Applying For Credit to Establish Your Credit History

To get approved for a mortgage, you should start applying for credit to establish your credit history. The sooner you start opening revolving accounts and applying for credit cards, the sooner you will be on your way to establishing a credit history. After you start establishing credit, it is important that you use your credit wisely. Banks and mortgage companies typically look for a credit history that reflects timely payments and responsible purchases. When establishing your credit history, you want to avoid overspending or exceeding your credit limits. The key is to demonstrate that you are responsible by making payments when they are due.

Start Saving Money for a Down Payment

In addition to establishing a credit history, it is also important for you to save money for a down payment. How much money you are willing to put down on your first home will make a difference in whether you are approved for a mortgage or not. You should expect to put at least 10% down on your first home, but there are programs that allow first home buyers to put down as little as a 3% down payment to get approved. If you do not have a large down payment, then you should consider applying for a government-insured home mortgage that is designed to help first-time buyers purchase their first home.

In addition to saving money for a down payment, you should also start saving money because banks and mortgage companies prefer applicants with assets. By saving your money and keeping it in a savings or retirement account, you can improve your chances of getting approved for a mortgage.

A Steady and Stable Employment History

In addition to evaluating your credit history, down payment and assets, banks also prefer working with young applicants who have a steady and stable employment history. If your goal is to get approved by a bank, then you should be steadily employed. If you are self-employed, then you may be asked to provide copies of at least two years of your tax returns.

Income Requirements

To qualify for a home mortgage, your debt-to-income ratio should not be above 40 percent. By using this formula, lenders are able to determine how much of a mortgage a first-time homebuyer can afford. Although the debt-to-income ratio lenders use varies, most lenders look for a debt-to-income ratio anywhere between 30 and 40 percent. If your debt-to-income is higher than 40 percent, then you should consider paying down your debt.

Consider Applying For a FHA Mortgage

If you do not have a substantial down payment or an established credit history, you should consider applying for a FHA loan. Although these mortgages have slightly higher interest rates, a FHA mortgage is a great option for young homebuyers who do not have a substantial down payment or a lengthy credit history.

Borrow Money for a Down Payment

In addition to FHA mortgages, you may also want to consider borrowing money for a down payment. In addition to borrowing from family and friends, you may want to take out a personal loan to accumulate the cash you need for a down payment quickly.

By following the tips discussed above, you will be on your way to fulfilling your goals and buying your first home.

Jonah writes for, a site that provides information about mortgage and refinancing, as well as?calculators and guides.

2 thoughts on “Getting a Mortgage When You Are Young”

  1. I’m looking at getting into my first home in the next couple of months. You mentioned in your article that most lenders will look to make sure my debt-to-income ratio isn’t more than 40%. This is definitely good to know since I want to make sure I get the best possible rate on my first mortgage.

  2. Thank you for your information on how in order to qualify for a home mortgage, your debt-to-income ratio should not be above 40 percent. I want to buy my first house but have no idea how to go about getting a mortgage. I will definitely keep all of your information in mind when trying to get a mortgage.

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