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Mortgage lenders want to know you’ll be able to afford monthly payments. To do this, they look at what your debt-to-income ratio (DTI) would be after taking on a mortgage.

The higher your debt-to-income ratio, the less likely you are to be approved for a mortgage; however, most lenders are more forgiving if you have a high credit score. While some lenders will approve mortgages for borrowers with a DTI as high as 43%, in most cases, it’s best to keep your DTI under 36%.

To calculate your DTI, add up all of your recurring monthly debt payments, plus your estimated mortgage payment, and divide it by your gross monthly income (before taxes).

When figuring out how much you pay each month in debt, don’t forget to include:

• Minimum credit card payments
• Student loans
• Auto loans
• Alimony or child support
• Personal loans
• An estimate of your mortgage payment

Let’s look at a few examples, using the average amount of debt in California, to see how to calculate debt-to-income ratio.

Given that the median monthly income in California is $6,273, a typical DTI in the state is 40%.

$2,498 ÷ $6,273 = 40%

Keep in mind your DTI will impact what type of mortgage you can apply for. In most cases, a conventional loan requires an after-mortgage DTI under 36%, a VA loan under 41%, and an FHA loan under 43%. While these rules aren’t set in stone, if your DTI is higher than these benchmarks, you will face more scrutiny during the underwriting process.

Shopping for a new home can be overwhelming. With such an expensive purchase and long-term commitment, you want to be certain you’re going to be satisfied.

In this article we’ll talk about what to look for when buying a house and what you need to consider when evaluating the most important elements of a home.

Of course, choosing a home is a highly personal decision. As you think about the different aspects of a home, rank their level of importance to your needs and then decide which ones are negotiable and which ones are deal-breakers.

If you haven’t already, you should determine how much home you can afford and what kind of area you’d like to live in (include neighborhood and school district in your decision) before you start seriously looking at houses.

Whether or not the house’s bedrooms are suitable for your needs will depend on what you plan on using them for. For example, families with small children might not want a house where the master bedroom is on a different floor from the other bedrooms in the house. If you plan on converting an extra bedroom into a home office, you might prefer a layout where the bedrooms are farther away from the hustle and bustle of the kitchen and living room. Ultimately it’s going to come down to what best fits your needs.

Again, the sizes and number of bedrooms are important considerations. However, there are plenty of other factors you should also think about including closet space, sources of natural and artificial light, views from the windows, general privacy, whether there’s an attached bathroom to the master bedroom and other factors.

One seemingly small detail that can end up being a big deal? Number and location of electrical outlets. This is especially important if the natural or built-in light in a bedroom isn’t sufficient, as you’ll be plugging in at least one or two lamps.

Bathrooms

When you’re checking out the bathroom, make sure everything’s in working order. With the seller or agent’s permission, flush the toilets, test the faucets and even turn on the shower. Make sure the fan works. Look under the sink and around the toilet for leaks and water damage. Keep an eye out for mold as well. It may seem a little overbearing, but if you’re seriously considering buying a house you want to make sure there are no post-move-in surprises like low water pressure or plumbing problems.

Make note of what type of shower or tub each bathroom has. Is it just a shower, or is it a shower and bathtub combo? Does it have glass doors or a curtain? Is the bathtub made of porcelain or a low-quality plastic? Bathroom renovations can be costly, so make sure you’re either happy with the bathrooms as-is or prepared to pay for improvements down the line.

Your new house requires maintenance not included in everyday cleaning and tidying up. These duties include:

Dryer hose and vent: Your dryer can become a fire hazard if the vents and duct are not cleaned often enough. Make sure you check your dryer at least once a year to make sure everything is working properly — more often if there’s a problem.

HVAC filters and maintenance: HVAC filters are fairly easy to change, once you know where they are, and should be swapped out every one to three months. Some air conditioning and furnace systems have a washable filter that you can take out and rinse off, so make sure you check to see what you have when you move into your new home.

Refrigerator: Simple maintenance can significantly increase the life of your refrigerator. Empty your ice bins monthly. Every three months, clean the condenser coils and inspect the door gasket. Newer fridges have insulated coils, so cleaning won’t be necessary. Every six months, replace the water filter and clean the drain hole, if applicable.

Water heater: Once a year, drain your water heater and rinse out any sediment that has collected in it. If you have a tankless water heater and live in an area with hard water, think about having a pro come out once a year and descale it.

Gutters: Make sure to clean your gutters at least once a year — more frequently if you have trees on your property. Not cleaning your gutters can lead to serious damage to your home, including mold and even ruining the foundation.

Water in your new house running too hot or too cold? Check the heat on your water heater and reset it if you aren’t comfortable with the temperature setting.

Make sure your smoke and carbon monoxide detectors are working. Carbon monoxide is called “the quiet killer” for a reason — it is odorless, colorless, and leaks are soundless, so there is no way to know if it’s in your house unless you have a working carbon monoxide detector. Replace the batteries in all smoke and carbon monoxide detectors around your new home to make sure they’re in working order.

Place fire extinguishers in the house — there should be one in the kitchen and one on each floor of the house. And set up an emergency kit and place it somewhere you’ll remember, making sure to check it every six months for expired products. Emergency kits should include items like:

• A three day supply of non-perishable food (don’t forget pet food, too)
• One gallon of water per person per day, and more if you have pets
• A battery powered or hand-crank radio
• A first aid kit
• Flashlight
• Batteries
• A manual can opener
• Prescription and non-prescription medications
• Cash, preferably in small bills
• A change of clothing for each person
• Matches
• Fire extinguisher
• Feminine supplies

You can tailor your emergency kit, so sit down and make a list of those day-to-day items your family needs.

Cleaning and painting

A lot of buyers aren’t organized enough to clean and paint before they move in, but it makes everything easier if you can swing it!

Try to get at least a thorough cleaning done before you move all your stuff in, and if you can, get all your painting done. It’s much easier to paint an empty room than a room packed with furniture.

Your new home might not have any window treatments; if not, they should be at the top of your list of things to purchase (you don’t want to give your new neighbors a bad first impression, after all).

Check to see if the house has horizontal and vertical blinds, and make sure you like the style. If not, make a list of all the windows that need treatments and the measurements of those windows so you have it handy at the hardware store or when you’re ordering online.

Get to know your new home

In case of emergency, you definitely need to know where everything is in your new home!

First, the main water shut-off valve — sometimes this is in the garage. Sometimes it’s in the basement or crawl space. Make sure you know how to shut off your water in case a faucet breaks or a sink starts leaking.

Next, find the circuit box and make sure your fuses or switches are well-labeled. Nothing is more frustrating than blowing a fuse and having to check each one individually because nothing is labeled. And you might be surprised — sometimes fuses from different parts of the house are tied together on one switch, so do your homework early and don’t be left scratching your head during an outage.

Find the gas shut-off valve, if applicable. During a natural disaster, the first directive is often to shut off the gas, so it’s super important to know where the gas shutoff valve is. If at some point you smell gas in the house and need to shut it off, you don’t want to have to go searching for the valve while your house fills with gas.

If you have a sump pump, make sure to test it. Sump pumps are amazing if they’re used correctly, but if not, they can lead to thousands of dollars worth of damage. They are located in the basement or crawl space of a home, and they ensure that if there is standing water in your home, it is pumped out into your storm sewer or a containment pond. The Roto Rooter website has some great step-by-step videos for checking your sump pump and maintaining it properly.

In the United States, more than 20% of homes rely on a septic system for treating wastewater. If you fall into this category, you’ll need to perform regular maintenance on your septic tank to make sure you don’t end up with a malfunction.

It’s a good idea to hire a professional to inspect your septic system, if you didn’t do so during closing of your loan. Septic tanks need to be pumped every three to five years, so make sure you have all the details on when maintenance was last performed on your system. There are different types of septic systems and several variables that can affect how they function, so hiring a professional in this case is probably your best bet.

So you’ve bought a house. Congratulations! You’re done, right?

Buyers — especially first-time buyers — can feel like they’ve just finished running a marathon after buying a house. But it’s not over yet! You still have to move in, customize the house to your needs, and make sure you’re prepared for the rigors of homeownership.

Here’s a complete list of what you need to do after buying your home.

Set up your new address everywhere

Now that you’re in your new digs, people need to be able to find you. Make sure to notify your friends and family. You want to get all your holiday cards, right?

Next is your employer — this one is important and frequently forgotten, so make sure you drop your HR department a line so they can update their records.

Don’t make the mistake of forgetting your creditors! The last thing you want is a ding to your credit score because a bill went to the wrong place.

Finally, the U.S. Post Office needs to know your new address. Set up mail forwarding from your old place to your new home to make sure you don’t miss any important correspondence.

Buying a house is a big deal and can be quite complex. It’s extremely important when buying a house that you know exactly what to expect and when you should be completing certain tasks.

First and foremost, mortgage loans that require either a small or no down payment can save the typical home buyer thousands of dollars in out of pocket costs.

Next, we learn that there are 2 types of loans that allow a qualified borrower to purchase a home with absolutely no down payment. These loans are the VA mortgage and the USDA home loan. Both loans have certain restrictions that Luke explains in detail throughout the article.

The third main point of the article highlights the various loans that allow borrowers to pay only a 3% to 3.5% down payment. The most popular low-down payment program is the FHA loan. This type of mortgage has been used for years by people wishing to buy their first home. In recent years, Fannie Mae has introduced 2 loan programs that are similar to FHA. One is called the Conventional 97 program and the other is known as the HomeReady program. Both loans have their own specific criteria that Luke spells out in the article.

Along with the aforementioned loans that are available nationwide, there are also many states that have specific initiatives for their residents to aid in the home buying process. Some of these organizations provide education counseling to help people understand the necessary steps for buying a home. Other organizations have established grants that can be issued to qualified buyers to assist with out of pocket items such as down payments or closing costs.
One last tip: the FHA loan, the Conventional 97 loan and the HomeReady loan require a 3% to 3.5% down payment. BUT, that down payment money can be a gift. Each program has restrictions about the gift, which Luke mentions. By using a gift, potential home buyers are provided with a way to buy a home much sooner than they likely expected.