Buying a home is always a difficult procedure for a first-time buyer, but it is especially tricky for a young person. Some of the major qualification requirements that banks use to offer you a mortgage (things like stability of employment, for example) are harder to demonstrate when you are just starting out. However, for those who have some cash on hand and solid credit, owning a home just starting out is a real option. For those who are determined to do so without those things, having help from your family can help make it work.
Pay off as much debt as possible. A general rule of thumb for loan approval is that your monthly obligations, including the new loan, be less than 38 percent of your income. If you are carrying credit card debt or a large car loan, try to pay it off before you apply for a mortgage.
Save as much money as you can. Although there are still some programs that will allow for you to get a mortgage with no money down or a small amount down (like 3 percent) these are rare. The more you can put down on a home, the greater chance of getting approved for the loan.
Check your credit. You can do this for free once a year, and you should do this every year. Estimates of the amount of mistakes on credit reports vary but go as high as 20 percent, meaning there can be a one in five chance that there are errors on your credit report. Guess what the odds are that an error will benefit you? Get it fixed. Contact the original creditor and if necessary, dispute it with the credit agency itself.
Keep the same job. Job hopping is more common for young people today than it was for their parents at that age, but stable employment is a big factor in credit approval. You want to show a solid work history, and when you're young, you have less of a work history to begin with.
Ask your parents to loan you money for a down payment. If you cannot qualify with the money you have, borrowing money from your family to increase the size of your down payment can help you get the loan.
Ask your parents to co-sign the mortgage with you. This is the absolute last thing you should do; exhaust all the other options first. Having your parents co-sign the mortgage makes them equally responsible for paying the mortgage, and it's not something that's likely to make either of you comfortable in the long run. If you take this step, as soon as you can refinance the mortgage without your parents, you should think about doing so, to remove them from your loan and end their liability.
Items you will need
- Proof of income
- Proof of any current debts
- Proof of identity
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