Holiday Builders


New Home Construction Buying Guide

2024 New Construction Home Buying Guide – Step 1 of 5

Step one in our five-step guide on buying a New Construction Home is regarding finances. This means preparing your finances and figuring out how much you can afford to purchase a new home. This key step determines the rest of the process. You can’t begin to shop for a home until you know what you can afford. Buyers want to position themselves in the best financial state possible when borrowing money. That means having a good credit score and money saved for a down payment. 

Lenders look for a debt-to-income ratio between 28% and 43%. Your debt-to-income ratio (DTI) is all your monthly debt payments divided by your gross monthly income. Getting your finances in order may mean taking a closer look at spending habits. The start of the new year is a natural time to get finances organized. Americans begin preparing for taxes and planning for the year’s expenditures. This is a good time to review or establish a home budget. For in-depth recommendations for getting your finances in order, follow the advice of Dave Ramsey. 

Today’s lending practices do not require a 20% down payment for borrowers. In fact, there are many programs for first-time homebuyers who may not have a great deal of money saved. No matter how much money you can put down, there are financial advantages to a higher down payment. A 20% down payment eliminates the need for mortgage insurance. Each borrower has a unique financial profile. Higher credit scores generally translate to lower interest rates. Preparing to borrow money is more than just figuring out what you can afford. This is the time to get organized. Know how much money you have and where it is. Be sure to make on-time payments for any credit cards. Track down paystubs, tax returns, and bank statements in preparation for making loan applications. Coastal Loans, our lending partner, provides information on lending products and more on their website. Read more on what to do or not to do when preparing for a home loan on the Coastal Loans website. 


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