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Two things are happening right now in America regarding home ownership and lending. Interest rates are reasonable which is good news for people that need to qualify for a home loan but financing is also coming with some stricter rules. It is not impossible to get a home loan and you don’t need to have a perfect credit history but you do need to be aware of certain things.

The rules that are stricter are the policies that got the housing market in trouble before with the wild west lending practices and the no documentation loans in the past. Remember the days when people could walk into a loan office with a credit score of 720 or better and get a loan without any documentation? Those days will probably never be back but there are still some creative financing options out there.

If you are wanting to purchase a home, it is not the time for a major career change with a large change in income. Banks and lenders are going to look for a steady income for the past 2 years at least. Any change of employment is going to be fine as long as it is in the same field with the same type of income. It is not the right time to leave a steady W-2 Income job to start your own business with no proof that it is making any money yet. Basically, you want to make yourself look like a stable person for the past 2 years in every aspect of your financial and professional life.

Your credit rating means a lot when it comes to purchasing a home and financing part of the purchase. You will normally need to have a down payment for the home as well and you might want to speak with your real estate agent about down payment assistance programs available in your area. You should know your credit rating ahead of time. There are free services out there to help in which you can pull your free credit report and get suggestions to improve your score. Don’t wait until you are ready to purchase your home to look at your credit. There could be mistakes on your report that need to be fixed and that could take time to dispute.

Paying down debts can always improve your credit. You want to keep your debt to income ratio low. You also want to use less than 30% of your available credit. That is the magic percentage that lenders do not want to see you going over on your credit report. Paying bills on time without missed or late payments will also be another huge factor in whether you qualify for a home loan or not. There are circumstances in which late or missed payments can be explained by life events to creditors. It cannot be a continuous thing or it can damage your credit rating.

Saving money for a down payment is an important part of the home financing process. Depending on what your budget is, start planning and it might be a good idea to start a savings account for your down payment and put away funds each month to go towards your down payment. Increasing your income can always help improve your chances of home ownership and qualifying for a home loan. Taking a side job or getting extra hours. Anything extra that you can show you are earning to add to your income on a steady basis will help you pay off your debts.