Discover the Power of Your Pre-Approval

Knowing your homebuying budget should be one of your first steps before you start the homebuying process. At UMortgage, we want to make this process as simple and transparent as possible, which is why we offer our Affordability Calculator to help you estimate the maximum home price and monthly payment that fits within your budget. Our Affordability Calculator takes key factors like your income, down payment, and monthly debts into account to give you an estimate of your homebuying budget. In the guide below, we’ll walk you through each step of the calculator to ensure you get the most accurate estimate. It's important to note that your results are not a pre-approval. To get an accurate pre-approval, follow this link to get connected with a UMortgage Loan Originator! Step 1: Enter Your Annual Income The first piece of information you’ll need to input is your annual gross income. This is your total income before taxes, including your salary, bonuses, and any other sources of income such as freelance work or rental income. Step 2: Input Your Proposed Down Payment Next, input the amount you plan to use for your down payment. The size of your down payment directly affects how much you’ll need to borrow. A larger down payment reduces the size of your loan, which also typically lowers your monthly payment and helps you avoid paying for private mortgage insurance (PMI) if you put down 20% or more. If you’re unsure how much you can put down, you can experiment with different amounts to see how they impact your affordability estimate. Step 3: Add Your Monthly Debts Now, it’s time to enter your monthly debts. Monthly debts should include any existing loans paid monthly. Examples include student loans, credit card bills, car payments, or any other money paid monthly to creditors. Monthly debts should only include borrowed money and not include services like your phone bill, home utilities, Netflix subscription, groceries, or other similar costs. Step 4: Estimate Your Interest Rate In this step, you’ll need to input your proposed interest rate. The interest rate significantly impacts your monthly mortgage payment. If you’ve already been pre-approved for a mortgage, you can use that rate. The featured interest rate when you go to the calculator is based on today's rates and is subject to change depending on your credit score and other factors. Step 5: Choose Your Desired Debt-to-Income Ratio The debt-to-income ratio (DTI) is a crucial factor in determining how much house you can afford. It’s the percentage of your gross monthly income that goes toward paying debts, including your mortgage. Most lenders recommend a DTI ratio of 36% or lower, but depending on your financial situation, you may be able to go higher. If you’re unsure what DTI ratio to choose, you can stick with the default 36%, which is a common guideline, or consult with your UMortgage LO for a more tailored recommendation. Step 6: Review Your Results Once you’ve filled out all the fields, UMortgage’s Affordability Calculator will do the rest! The calculator will estimate: The maximum home price you can afford based on the information you provided. Your estimated monthly mortgage payment, which includes principal and interest. These estimates will give you a clearer picture of what fits within your budget and help you start shopping for homes with confidence. Using UMortgage’s Affordability Calculator is an excellent way to get an initial sense of what home prices are within reach based on your financial situation. Remember, this tool is designed to give you an estimate—your final loan amount and mortgage terms will depend on other factors, such as your credit score, loan program, and lender-specific requirements. If you’re ready to take the next step or want a more accurate mortgage quote, we’re here to help! Fill out this form today to get connected with a UMortgage Loan Originator near you to discuss your options, get pre-approved, and get answers to any questions you may have about the homebuying process.

If you're considering buying a home, getting connected with a local Loan Originator who can get you pre-approved for a mortgage should be your first step. Having your pre-approval done by a mortgage expert who knows the ins and outs of the process can make all the difference in your homebuying journey. Below, we’ll outline the power your pre-approval gives you when you hit the market and start your homebuying process 1. Focus Your Home Search on What You Can Afford Buying a home is a big decision, and it's easy to get caught up in the excitement of browsing listings in your dream neighborhood. However, not every home you like might fit your budget. That’s where mortgage pre-approval comes in handy. By getting pre-approved, you’ll know exactly how much you can borrow for your home loan based on your financial profile. You wouldn’t go shopping without your wallet, would you? It’s the same as trying to buy a home without a pre-approval. Having a clear budget allows you to narrow your home search to properties that fit within your price range, saving you time and helping you avoid disappointment. No more wondering if you can afford that dream home—with your pre-approval, you’ll have a concrete understanding of what’s possible so you can focus on the homes that match your budget. 2. Shows Sellers that You’re a Serious Buyer In today’s competitive housing market, you can set yourself apart from other buyers by showing home sellers and their listing agents that you’re a serious, committed buyer. A pre-approval letter is pretty much a vote of confidence from a lender, letting home sellers and their agents know that you have the financial backing to follow through on your offer. When sellers see that you’re pre-approved, they’re more likely to prioritize your offer over buyers who haven’t taken this step. It also shows that you’re proactive, prepared, and ready to move forward, which can make all the difference if multiple buyers are bidding on the same home. 3. Strengthens Your Negotiation Position and Speeds Up the Process Once you’ve found the perfect home and are ready to make an offer, your pre-approval can give you extra leverage during negotiations. Since you already have a lender’s commitment to loan you the necessary funds, you’ll come across as a more secure and reliable buyer. This can make a seller more willing to negotiate, especially in a fast-moving market. Additionally, once your offer is accepted, having a pre-approval in place can streamline the rest of the mortgage process. With many of the financial details already confirmed and the necessary documentation on hand, your loan can move through underwriting more quickly. This can help you close the deal faster and get the keys to your new home sooner. Getting pre-approved for your mortgage gives you a clear budget, signals to sellers that you’re a serious buyer, and strengthens your negotiation power. By taking this step early, you’re setting yourself up for success in a competitive real estate market. So, what are you waiting for? Fill out our pre-approval form to get the ball rolling!

If you’ve ever considered buying a home, one of your first thoughts has probably been the amount of cash you need to save for a down payment. There are plenty of myths out there about the homebuying process, but few are as prevalent as the belief that you need to put 20% down to buy a home. Below, we’ll explore the ins and outs of down payment requirements, whether you need to pay a 20% down payment to buy a home, how different down payment amounts can impact your mortgage payment, and some tips to help you get some help towards your down payment. Do You Really Need a 20% Down Payment to Buy a Home? The short answer: no. The long answer is still no, but a down payment that’s less than 20% could add an additional cost to your monthly mortgage payment. Before we get into that, let’s first cover down payment minimums. Different loan types come with different down payment minimums. And no, none of those minimums are 20%! In the bullets below, you can see the minimum down payment for the four main loan types: Conventional Loans: These are the most common mortgages, and the minimum down payment can vary from 3% to 5%. However, a down payment of less than 20% means you will have to pay private mortgage insurance (PMI), which protects the lender in case of default. The amount you pay in PMI depends on your loan and down payment size, and once your loan balance drops beneath 78% of the home's value, your lender will cancel your monthly PMI payment. FHA Loans: Backed by the Federal Housing Administration, FHA loans are designed for first-time homebuyers and those with lower credit scores. The minimum down payment for an FHA loan is only 3.5%. USDA Loans: The United States Department of Agriculture offers loans for rural property purchases. Here, you can potentially qualify for a 0% down payment, making homeownership extremely accessible in eligible areas. VA Loans: VA loans are a fantastic option for veterans, active-duty service members, and their spouses. These loans require no down payment, but there are funding fees associated with them. You can read this for more on the intricacies of VA loans. Now that you know that the minimum down payment for any type of mortgage is significantly less than 20%, let’s talk about the most common down payment amount for specific types of homebuyers. What’s the Average Down Payment on a Home? It all depends on what kind of homebuyer you are. The homebuying process is not a one-size-fits-all process. Different buyers have their own unique set of financial needs and desires for their homebuying process. That being said, we sourced some national averages for down payments to help you see that a 20% down payment is more uncommon than you might think. First-Time Homebuyers: The average down payment for first-time homebuyers is around 6% to 7%. Many first-time buyers take advantage of lower down payment options available through FHA, VA, and USDA loans, as well as certain conventional loan programs. Repeat Homebuyers: Those who are already homeowners tend to put down more, averaging around 12% to 16%. This higher percentage is often due to the equity they've built up from previous homes which enables them to make larger down payments. While these average and median down payments are most common, the perfect down payment is the down payment that works best for your unique financial situation. If you have any questions about what your down payment could look like, don’t hesitate to reach out for some expert insight. Down Payment Assistance Programs and Grants Need help with your down payment? You have some options. Coming up with a lump sum to pay your down payment is one of the biggest obstacles preventing many first-time buyers from fulfilling their dreams of homeownership. Fortunately, there are numerous programs and grants available to assist with down payments. These programs can significantly reduce the financial barrier to homeownership: State and Local Programs: Many states and local governments offer grants or low-interest loans to help cover down payments and closing costs. These programs often cater to first-time buyers and those with moderate incomes. My team has helped buyers use state and local programs in the past, so feel free to reach out for guidance. Federal Programs: The Department of Housing and Urban Development (HUD) offers several programs. You can visit hud.gov to see what’s available in your area. Just like the state and local programs, feel free to reach out for some guidance on your options. Lender-Specific Programs: At UMortgage, we have several down payment assistance programs available, including grants, deferred payment loans, and forgivable loans that can help reduce the initial cost of buying a home. If you’re interested in learning more details about my options for you, don’t hesitate to reach out. I hope this blog helped you realize that the idea of a 20% down payment being necessary to buy a home is a myth. Most homebuyers buy with less than 10% down. By understanding the true requirements and available resources, you can make informed decisions and take the first steps toward buying your home. If you feel like a down payment is standing between you and your dreams of homeownership, let’s connect! I have plenty of options that can make homeownership significantly more affordable for you and your family.