• Chuck, Tom & Bill Clancy

Young Professionals First-time Home Purchase Plan

Young professionals who are buying their first home face many challenges in our current market, primarily higher student loan debt. A Bankrate study showed that 61% of Millennials do not yet own a home, and almost 25% of them nailed student loan debt as the reason. While debt from going to college does not automatically disqualify homebuyers from obtaining a loan, it does make saving for a down payment more difficult as well as pushing the debt-to-income ratio higher. These are two vital factors in a lender’s approval process for a mortgage.

Millennials should not be scared off, though. Buying a home is absolutely within reach with just a bit of discipline and planning. If buying your first home is a goal in the next couple of years, here are some steps to take in ensuring you are credit-ready.

1. Lower your debt-to-income ratio. DIT is one of the first things a lender will consider. Lowering your debt, even by the slightest margin, can help earn that approval:

  • Pay down any debts possible by using tax refunds, bonuses, or any extra funds.

  • Increase income by asking for a raise or doing freelance work or adding a side gig.

  • Consolidate or refinance your student loans to reduce interest rates and payments.

  • Enroll in an income-based repayment plan to reduce student loan payments to match your current income better.

2. Improve your credit score. Also a significant factor in obtaining a mortgage, the credit score is an essential piece of the mortgage puzzle. Earning a higher score and keeping it there helps up your possibilities of being approved as well as affects what type of loan you qualify for.

  • While you don’t need to open any new lines of credit, keeping current lines open with low to zero balances can help toward increasing your credit score.

  • Check your credit report and report any inaccuracies that may be counting against you.

  • Pay your bills on time, every time.

Although Millennials face several challenges in purchasing their first home, these tips are a great way to start planning for the future. Going to school and earning a degree does not mean young professionals have to miss out on home ownership.

If you or someone you know if looking to buy a home for the first time, contact Team Clancy. We’ve been helping home buyers in the Richland, Gull Lake, and Greater Kalamazoo area buy homes since 1988.


(269) 629-4186 | Info@TeamClancy.com

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