Homebuyer Readiness Checklist

Buying a home is likely the largest financial decision you'll make. Work through this checklist to know where you stand — and what to address before you start shopping.

Check off items as you complete them, then save your progress.

📊 Credit Readiness

Pull your credit report from all three bureaus at AnnualCreditReport.com
Verify no errors, unknown accounts, or incorrect late payments
Dispute any errors before applying (allow 30–60 days for resolution)
Know your credit score — aim for 620+ for conventional, 580+ for FHA
Score 740+ gets you the best interest rates and saves thousands over the loan term
No new credit applications in the 3–6 months before you apply for a mortgage
Credit utilization below 30% (ideally below 10%) on all revolving accounts

Credit score impact on rate: On a $250,000 30-year mortgage, the difference between a 680 score (~7.0% rate) and a 760 score (~6.3% rate) is roughly $100/month — or $36,000 over the life of the loan. Time spent improving your score before buying is often the highest-ROI preparation step.

🏦 Financial Foundation

Stable employment history — 2+ years in the same field (lenders verify this)
No major income gaps in the past 24 months
Debt-to-income (DTI) ratio under 43% (most lenders prefer under 36%)
Calculate your DTI: total monthly debt payments ÷ gross monthly income
Emergency fund of 3–6 months expenses remains intact after closing costs and down payment
No large undocumented deposits in bank accounts in the past 60–90 days (lenders scrutinize these)

💰 Down Payment Savings

Know your loan type target and required down payment (see table below)

Loan Type	Minimum Down Payment	Notes
Conventional	3–5%	PMI required if <20%; PMI drops off at 20% equity
FHA	3.5% (580+ score)	MIP for life of loan if <10% down
VA	0%	Active military, veterans, eligible surviving spouses
USDA	0%	Rural areas only; income limits apply
Conventional 20%+	20%	No PMI; best rate; strongest offer

Down payment funds are fully saved and in a stable account (not invested in stocks)
Down payment source is documented — gift funds require a letter from the giver
Investigated first-time homebuyer programs in your state (often down payment assistance is available)
KCCU pre-qualification obtained — know your maximum loan amount before shopping

📝 Closing Cost Budget

Budget 2–3% of purchase price for closing costs (separate from down payment)
On a $250,000 home: roughly $5,000–$7,500 in closing costs
Asked about seller concessions — in slower markets, sellers sometimes cover part of closing costs
Reviewed Loan Estimate (LE) from lender — received within 3 business days of application
Compared the Loan Estimate to the Closing Disclosure before closing day

🏠 Ongoing Costs Are Budgeted

Monthly PITI calculated: Principal + Interest + Taxes + Insurance
Property taxes verified (ask the listing agent for current annual amount)
Homeowner's insurance quoted (get 2–3 quotes; averages $1,000–$2,500/year depending on location)
HOA fees confirmed if applicable
Maintenance budget built in: 1% of home value per year is a standard rule (1.5–2% for older homes)
Total housing cost is under 28% of gross monthly income (28/36 rule front-end ratio)

🔐 The Homebuying Process

Get pre-qualified at KCCU before contacting real estate agents or touring homes
Choose a buyer's agent (buyer's agent is typically paid by the seller — no cost to you)
Understand the current market in your target location (buyer's vs. seller's market)
Home inspection budgeted: $300–$600 (non-negotiable — always get one)
Understood contingencies: inspection, financing, appraisal — don't waive these lightly
Know your timeline: from offer to close is typically 30–60 days

✅ Post-Closing Checklist

Update your address with USPS, employer, bank, KCCU, IRS
Transfer/set up utilities in your name before move-in
Change locks (standard practice on any home purchase)
Know where your shutoffs are (water main, electrical panel, gas)
Start building your home maintenance fund immediately
Review homeowner's insurance coverage — confirm dwelling coverage matches replacement cost, not purchase price

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This checklist is for educational purposes only. Loan eligibility, down payment requirements, and program availability depend on your individual financial situation, lender, and current market conditions. Contact KCCU to discuss mortgage options specific to your situation.

How Much House Can I Afford? → FHA vs. Conventional Understanding Closing Costs