Dear Future Homeowner - Things You Need to Know

Dear Future Homeowner,

I’m excited to share this 6 month Homebuying Preparation Guide to help you feel confident, organized, and financially prepared to purchase a home this year. Buying a home is a journey, and with the right plan, it becomes much more manageable and empowering.

Review my HomeBuyers workshop: 

https://www.tianamyrealtor.com/home-buyer-workshop

Below is a 6-month breakdown outlining what to focus on each month, how to save strategically, and what lenders look for when qualifying you for a mortgage. (Plus a bonus 7th month)

1st Month – Set the Foundation

Focus: Financial awareness & credit health

• Review your credit report and dispute any errors

• Avoid opening new credit lines or making large purchases

• Create a realistic monthly budget (Follow the 50-30-20 rule. 50% or your take home income goes to needs: housing, meals, transportation. 30% goes to wards wants: shopping, nails, spa, travel, etc. 20% go to savings: 1st to build your 3-6 months  emergency fund. Then to paying down high interest debt (like credit cards), and then to your home buying fund. 

• Start tracking spending and identify areas to cut back

Goal: Know where you stand financially

2nd Month – Start Saving with Purpose

Focus: Down payment, closing costs & emergency fund

• Open a dedicated savings account for homebuying

• Begin saving for:

  • Down payment (which is typically 0%, 3.5%, or 5+% of the purchase price) 

  • Closing costs (2% - 4% of the purchase price) - These are the cost you have to pay to purchase the property and transfer it to your name  

  • Emergency fund (3–6 months of expenses)

• Automate savings if possible into a different account outside of your primary spending account  

Goal: Build consistency with saving

3rd Month – Learn Your Loan Options

Focus: Education & lender conversations

• Speak with 1–2 lenders to discuss loan programs. Here are some that I have worked with in the past:
  https://www.tianamyrealtor.com/home-buyer-workshop/preferred-lenders

• Learn which loan type best fits your situation: FHA, Conventional, Veterans Loan, USDA rural land loan, etc.
  https://www.tianamyrealtor.com/loan-options

• Ask about down payment and closing cost assistance

• Begin gathering required financial documents (Last 60 days of paystubs, last 60 days of bank statements including checking, savings, stock brokerage accounts, and retirement accounts, last 2 years of W-2s, Last 2 years of tax returns…)
  ** Don’t let them pull your credit until you are within 60-90 days of wanting to buy a house  

Goal: Understand your buying power

4th Month – Get Pre-Approved

Focus: Financial readiness

• Submit documents to your lender. This is also the time when your lender runs your credit.

• Obtain a mortgage pre-approval

• Refine your price range and monthly payment comfort level

Documents Lenders Typically Require:

• Last 60 days of pay stubs

• Last 60 days of bank statements

• Last 2 years of tax returns

• W-2s or 1099s (if applicable)

• Photo ID

Goal: Be fully pre-approved and market-ready

5th Month – Define Your Home Criteria

Focus: Clarity & priorities

• Decide your must-haves vs. nice-to-haves

• Consider:

  • Location & commute

  • School districts

  • Property taxes & HOA fees

  • Long-term resale value

• Begin monitoring neighborhoods and home prices. Send me a list of what you want in a house and I will set you up with daily emails to send you homes that match your criteria. Include things like the area, # of bedrooms and bathrooms, preference for a garage, preference for a basement, fixed upper or already renovated, etc.

Goal: Know exactly what you’re looking for

6th Month – Vet Neighborhoods & Prepare to Tour

Focus: Research & readiness

• Visit neighborhoods at different times of day to make sure its areas you like in the day time and at night time

• Research crime stats, future development, and amenities

• Attend open houses (even casually)

• Stay disciplined with savings and credit

Goal: Feel confident about where you want to live

7th Month – Congrats! You’re Ready to Buy

Focus: Action

• Begin touring homes seriously with your realtor  

• Make competitive offers with confidence

• Stay responsive during negotiations and inspections. Be ready to pay out of pocket for your Earnest Money deposit which is about 1% of the purchase price, your home inspection which ranges from $400-$600+, and your appraisal which also ranges from $400-$600+. These are your upfront costs when purchasing a home.

Goal: Secure the right home, not just any home

Down Payment & Closing Cost Assistance

Maryland Programs: Link to more info - 

https://www.tianamyrealtor.com/all-things-md-real-estate/maryland-downpayment-assistance-programs

• Maryland Mortgage Program (MMP)

• Maryland SmartBuy

• 1st Time Advantage

• Local county grants (varies by location)

Washington, DC Programs: Link to more info - 

https://www.tianamyrealtor.com/all-things-dc-real-estate/dc-downpayment-assistance-programs

• DC Open Doors

• HPAP (Home Purchase Assistance Program)

• EAHP (Employer-Assisted Housing Program)

Eligibility varies by income, location, and loan type.

Final Thoughts

Buying a home takes preparation, patience, and discipline. It is absolutely achievable with the right plan and guidance. My role is to make sure you’re educated, protected, and confident every step of the way.

Please don’t hesitate to reach out with questions or when you’re ready to take the next step. I’m here to help you turn preparation into ownership.

Dear Future Homeowner,

This month, let’s do some quick math to help you identify a realistic savings goal for purchasing your future home.

Step 1: Build Your Emergency Fund First

Before saving for a home, make sure you have an emergency fund set aside. This should equal 3–6 months of your living expenses, including rent, utilities, transportation, and groceries.
👉 Keep this fund in a separate savings account, not your everyday checking account.

Step 2: Establish a Monthly Savings Habit

A general rule of thumb is to save at least 20% of your paycheck. If you’re able to save more, even better—allocate the extra funds directly to your home-buying savings account.

Additionally, plan to save an extra $1,000 to cover non-refundable upfront costs, such as:

• Home inspection

• Appraisal

Step 3: Understand Down Payments & Credit Requirements

FHA Loans

• Minimum down payment: 3.5%

• Minimum credit score: 580+

• Higher credit scores = better interest rates
  (Remember, your interest rate directly impacts your monthly mortgage payment.)

Conventional Loans

• Minimum down payment: 3%

• Typical minimum credit score: 620+

• Higher credit scores qualify for stronger rates and terms

Step 4: Plan for Closing Costs

In DC and Maryland, closing costs typically range between 2%–4% of the purchase price.

📌 When you combine down payment + closing costs, most buyers should aim to save 5%–7.5% of the purchase price, in addition to their emergency fund.

Savings Examples

• $350,000 home
  5%–7.5% = $17,500–$26,250

• $500,000 home
  5%–7.5% = $25,000–$37,500

A simple way to estimate your goal is to take the price of homes you’re viewing online and multiply it by 5%–7.5%.

Don’t Have That Much Saved Yet? That’s Okay.

There are down payment and closing cost assistance programs available in both Maryland and DC that can significantly reduce your out-of-pocket costs.

I’ve helped clients purchase homes with less than $3,000 out of pocket by using these programs.

📍 Maryland Programs:
https://www.tianamyrealtor.com/all-things-md-real-estate/maryland-downpayment-assistance-programs 

📍 DC Programs:
https://www.tianamyrealtor.com/all-things-dc-real-estate/dc-downpayment-assistance-programs 

If you have questions or want help creating a personalized savings plan, feel free to reply to this email. I’m here to help you move closer to homeownership.

Dear Future Homeowner,

Let’s talk about how debt impacts how much home you can afford, also known as your Debt-to-Income Ratio (DTI).

Why Debt Matters When Buying a Home

Did you know that the amount of debt you carry directly impacts how much a lender will qualify you for?

Your monthly debt payments (car loans, credit cards, student loans, etc.) count against your buying power.

For example:
You may feel comfortable affording a $2,700/month mortgage, but if you also have a $700/month car payment, a lender may say:

“Instead of qualifying you for a $2,700 mortgage, I can only qualify you for a $2,000 mortgage.”

That difference can mean qualifying for a $450,000 home versus a $390,000 home.

And while a $390,000 home may still work for you, it’s important to make sure there are homes you actually like available within that budget.

Understanding Debt-to-Income Ratio (DTI)

Your DTI compares your total monthly debt payments to your gross monthly income.

• A DTI below 36% is considered healthy and favorable.

• Some lenders will allow DTIs up to 43% or higher, depending on the loan program and your overall financial profile.

Example:

• Monthly gross income: $5,000

• 36% DTI = $1,800 total allowable monthly debt

If you had no other debt, your mortgage could be up to $1,800/month.

But let’s add existing debts:

• Car payment: $300/month

• Credit cards: $50/month

• Student loans: $200/month
  Total monthly debt: $550

Now your maximum mortgage payment becomes:

• $1,800 – $550 = $1,250/month

That significantly impacts the price range of homes you can afford.

👉 This is why I always recommend avoiding new debt (new car, new credit cards, large purchases) until after you buy your home.

The Saving Grace

While 36% is ideal, some lenders allow higher DTIs.

Using the same $5,000 monthly income:

• 43% DTI = $2,150

Subtract the same $550 in monthly debt:

• $2,150 – $550 = $1,600/month mortgage

That extra flexibility can make a big difference in your buying power.

What Should You Do About Debt?

The good news is: people buy homes with debt every single day.

Your lender may:

• Ask you to pay off certain debts

• Be okay with student loans but want credit cards paid down

• Qualify you now—but explain what needs to change if you want a larger home

The key is talking to a lender early so you know where you stand.

🔗 Preferred lenders you can speak with:
https://www.tianamyrealtor.com/home-buyer-workshop/preferred-lenders

Your Homework (Yes, I’m an Educator at Heart 😊)

Calculate your DTI here:
https://www.calculator.net/debt-ratio-calculator.html 

After calculating, ask yourself:

• What is my DTI?

• Is it below 36%?

• Is it below 43%?

• Am I comfortable with this number?

Next, redo the calculation and replace your current rent with your ideal monthly mortgage payment (you can find estimates on listing websites).

Then ask:

• What is my new DTI?

• Is this still affordable?

• Do I want to pay off debt or increase my income to improve my DTI?

For more home-buying education and resources, visit:
https://www.tianamyrealtor.com/home-buyer-workshop 

If you have questions or want help creating a strategy that fits your goals, I’m always here to help.