For many people, renting is the only option when looking for a place to live.  Requirements for purchasing a home can include a hefty down payment, a high credit score, and at least two years of steady employment. Those new to the workforce may need to establish credit and save a little before they can buy.  You can take steps now while renting to put yourself in the best position when you are ready to buy your first home. Here are five of them:

1. Check and improve your credit score- Your credit report is available from the three national credit bureaus, Experian, TransUnion, and Equifax. You can request them for free once a year, per credit bureau. Obtain a copy of each report to review for accuracy and seek advice if necessary from a credit expert on how to improve your credit score.
2. Determine your DTI – Your debt-to-income, or DTI ratio, is the percent of your monthly gross income that goes toward outstanding debt. Lenders look at this ratio to determine how much you can afford to pay for a home, usually wanting it no higher than 43%.This is also why it is important to pay down as many outstanding debts as you can. If you want to know how much home you can afford, here’s a calculator you can use.
3. Save money – Having a substantial amount of money saved up is crucial when buying a home. You will need at least a 3.5% down payment for an FHA loan, and some loans may require as much as 20% if you don’t want to pay private mortgage insurance. Plus, there are closing costs and other fees you may need to cover. Start saving as soon as possible, putting away as much as you can toward these costs. Opening a certificate of deposit account can be a good option; they have higher interest rates than most checking and savings accounts. Some banks even offer better rates when combined with opening a checking account.
4. Research different mortgage loan programs – First-time homebuyers should look into all purchasing programs available to them, including FHA loans, VA loans, and Good Neighbor programs. It’s also a good idea to get pre-approval so you can be ahead of the game. Some banks offer programs that allow you to be underwritten upfront so that when you find your home, you’re ahead of the process versus other buyers. This is especially advantageous in a low inventory market. And if you are self-employed and can’t supply a W-2 or pay stubs, a bank statement loan is a good option.
5. Find a reputable real estate agent – The right real estate agent can make all the difference when looking to buy your first home. Find an agent that will look out for your best interests and give you their full attention. Ask friends and family for recommendations, check online reviews, and talk to two or more agents before you make a decision.

These are just a few tips to help you prepare for purchasing your first home. The main things are to save, research and improve your credit standing. And enjoy the ride!

Here's a calculator to help you determine whether buying a home is a better deal than renting. If you would like to talk to the home loan experts at NASB, give us a call at 855-465-0753, or click here to start your home buying journey.