A Quick Guide to Financing a Home with Servion

Buying a home is an exciting milestone, but preparing financially is key to making the process smooth and stress-free. Follow these ten steps to set yourself up for mortgage success with Servion by your side.

1. Develop a Budget

Rather than guessing how much home you can afford, take a close look at your actual spending habits. Review your bank statements and create a budget that accounts for fixed expenses (like utilities and groceries) and unexpected costs. Identifying areas to cut back—such as unnecessary subscriptions or frequent dining out—can help you save more for your future home.

2. Reduce Debt

Lenders evaluate your debt-to-income ratio (DTI) to determine how much you can borrow. While many lenders prefer a DTI of 36% or lower, some loan programs allow for higher ratios. Calculate your DTI by dividing your total monthly debt payments by your gross monthly income. Keeping your total housing costs between 25% and 28% of your gross income and non-housing debt below 10% will improve your mortgage eligibility.

3. Maintain Stable Employment

Lenders like to see steady employment, typically at least two years with the same employer or in the same industry. A stable job history reassures lenders of your ability to make consistent mortgage payments.

4. Increase Your Income

If a raise is possible, now is a great time to ask for one. Some buyers also take on a second job to increase their income. However, balancing work and quality of life is important—consider adjusting your home expectations if needed.

5. Build Good Credit

A strong credit history is essential for securing favorable mortgage terms. If you're new to credit, start by responsibly using a credit card and paying all bills on time. Avoid maxing out credit limits and keep your credit utilization low.

6. Check Your Credit Report

Obtain a free copy of your credit report from AnnualCreditReport.com and review it for errors. If you spot any inaccuracies, dispute them promptly to prevent them from affecting your mortgage application.

7. Save for a Down Payment

While a 20% down payment helps you avoid private mortgage insurance (PMI) and secure better loan terms, many buyers put down much less. Some loan programs allow as little as 3% to 5% down, making homeownership more accessible. Don't forget to budget for closing costs, which typically range from 2% to 7% of the home's purchase price.

8. Explore Mortgage Options

Work with a trusted mortgage advisor at Servion to explore different loan types, including fixed-rate vs. adjustable-rate mortgages, conventional vs. government-backed loans, and various loan terms. Your choice should align with your financial goals and long-term plans.

9. Gather Required Documentation

To get preapproved, lenders typically request documents such as W-2s, pay stubs, tax returns, and recent bank statements. Having these ready in advance can speed up the mortgage process.

10. Look Into Down Payment Assistance

Many state and local programs offer assistance for first-time homebuyers. Your employer or family members may also provide financial support for your down payment—just ensure any gifted funds are properly documented.

Ready to Take the Next Step? At Servion, we’re here to guide you through every stage of the home financing process. Whether you're a first-time buyer or a seasoned homeowner, our mortgage experts can help you find the best loan options for your needs. Contact Servion today to get started on your path to homeownership!