Determining your budget for buying a home involves understanding your Debt-to-Income (DTI) ratio, which is the percentage of your monthly gross income that goes towards paying debts. Most lenders use a DTI ratio of 28% for housing expenses and 36% for total debt payments. This means your total monthly mortgage payment should not exceed 28% of your gross monthly income, and your total monthly debt payments should not exceed 36%. However, there are some programs that allow a DTI ratio of up to 50%. It's important to keep in mind that while you may qualify for a higher ratio, you should ensure that the monthly payment is one you are comfortable with and that fits within your budget. Working with a mortgage lender can help you calculate your DTI ratio and determine a realistic budget based on your income and existing debts.

Choosing the right type of property depends on your lifestyle, financial goals, and personal preferences. A single-family home offers the most privacy and space but may require more maintenance. A condo typically provides amenities and a more communal living environment but comes with monthly fees. Multi-family living, such as a property with ADU, duplex or triplex, offers the opportunity for house hacking, where you live in one unit and rent out the others to help cover your mortgage. This can be a great way to offset housing costs while building equity. It's important to weigh these factors and choose a property that aligns with your needs and long-term plans.

The homebuying process involves several steps, starting with getting pre-approved for a mortgage to determine your budget. This initial step can take a few days to a few weeks, depending on how quickly you can provide the necessary documentation to your lender. Once you've found a home you love, you'll make an offer, negotiate with the seller, and have the home inspected. This process can take anywhere from a few days to a few weeks, depending on the market and the complexity of the negotiations. If you're using a mortgage to finance your purchase, your lender will arrange for an appraisal to determine the home's value. Closing involves signing paperwork and transferring ownership, and typically takes about 30-45 days from the time your offer is accepted to the time you can move in. Working with a real estate agent can help guide you through each step and ensure a smooth transaction.

Owning a home can have several tax benefits, including deductions for mortgage interest, property taxes, and certain closing costs. These deductions can lower your taxable income and reduce your tax bill. However, it's important to consult with a tax professional to understand how homeownership will affect your specific tax situation. In California, homeowners may also be subject to supplemental property taxes, which are additional taxes levied when a property is reassessed due to a change in ownership or new construction. Additionally, there are responsibilities such as property taxes and potential capital gains taxes when selling a home that should be considered.

Usually, you are asked to provide your last two tax returns to show proof of income. You should also provide recent bank and credit card statements and proof of your current pay rate. You will also be asked for your social security number so they can run a credit check.

A conventional loan down payment can be a low as 3% of the sales price, but other types of financing require as little as 0% down. A mortgage lender can tell you what types of loans you qualify for. You will have to pay mortgage insurance if you put less than 20% down but you may be surprised to know that I often recommend putting less down even if you can afford a higher monthly payment, we’ll talk about why when we meet!