Save for a House

How much you’ll need and what to expect when you apply for a mortgage.

Before lenders will approve you for a mortgage, they want some assurance that you aren’t going to default on the loan—that you have enough income to pay your mortgage, enough savings for a down payment and closing costs, and a good credit history. The better your credit profile and the bigger your down payment, the lower the interest rate for which you’ll qualify. (In early April, the average 30-year fixed rate was 4.3%.)

Lenders size up your “three c’s”—credit history (your credit score and your record of debt repayment), capacity (income, savings and investments) and collateral (your down payment and the value of the home you want to buy, after an appraisal). They verify employment for the past two years and try to predict how likely it is that you’ll keep your job. If you’re weak in one area, strength in the other two or in a spouse’s profile may compensate.

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Patricia Mertz Esswein
Contributing Writer, Kiplinger's Personal Finance
Esswein joined Kiplinger in May 1984 as director of special publications and managing editor of Kiplinger Books. In 2004, she began covering real estate for Kiplinger's Personal Finance, writing about the housing market, buying and selling a home, getting a mortgage, and home improvement. Prior to joining Kiplinger, Esswein wrote and edited for Empire Sports, a monthly magazine covering sports and recreation in upstate New York. She holds a BA degree from Gustavus Adolphus College, in St. Peter, Minn., and an MA in magazine journalism from the S.I. Newhouse School at Syracuse University.