Planning to buy a home in Oregon? You’ve come to the right place. In this section, we’ll take a closer look at some of the requirements needed to buy a house in the Beaver State. This guide contains key information on the home buying process in Oregon, and is designed to give you an educational jumpstart so you can create the best strategy and make well-informed decisions towards your goal of homeownership.
The basic requirements
The real estate markets in different communities throughout the state of Oregon have experienced significant changes over the last several years, particularly concerning home prices. A number of new mortgage products are also available, which home buyers in Oregon should also know about.
With that said, here are some basic requirements for Oregon home buyers:
- Knowledge of available mortgage programs – Home buyers in Oregon have a variety of mortgage options to choose from, such as adjustable, FHA, conventional, fixed-rate mortgage programs, and more. Each option comes with its own advantages and disadvantages, which is why it’s important to gather information on the variety of mortgage loan programs in advance before you commit to anything.
You can get in touch with an experienced loan officer to discuss mortgage financing officer, or ask your real estate agent for help on understanding the variety of home loans, so you can figure out which one works best for your current situation.
- Down payment – Another key requirement to purchasing a home is the down payment. First-time home buyers in Oregon can look into several down payment assistance programs that are available in the state.
Those with a conventional home loan not insured by the government are typically required to make a down payment of 3% or more. Those with an FHA mortgage program will need to make a down payment of 3.5%. Current military personnel and veterans in Oregon may qualify for VA mortgage financing, which does not require a down payment.
- Good credit standing – A recent study conducted by a successful mortgage software company reveals that borrowers with credit scores of 600 and above had the most closed loans. While this score is by no means the standard, it does provide some insight into current trends in the industry.
Having a good credit score is a key requirement for home buyers in Oregon. Lenders will take a look at your score to see your history when it comes to borrowing and repaying money. Scores are based on information that appears on your credit reports.
There are some mortgage programs that offer more flexibility with credit score requirements compared to others, so be sure to ask your loan officer for more information.
- A manageable amount of debt – Another important requirement for buying a house in Oregon is an acceptable debt-to-income ratio, which compares how much you earn to the amount you spend on recurring debts.
Similar to credit scores, Oregon does not impose cut off points or threshold requirements for home buyers in the state. Some mortgage programs however, are more flexible with high debt amounts. In certain situations, a borrower could have a 50% debt-to-income ratio and still be able to qualify for a loan. The US government-sponsored Federal National Mortgage Association, more commonly known as “Fanny Mae,” recently raised their debt limit from 45% to 50%.
Tips for first-time Oregon home buyers
- Set a budget before searching for a home – Before you start your house hunt, it’s important to take a look at your current income and average monthly expenses and figure out how much you can put towards a monthly mortgage payment.
Establishing a realistic budget will help ensure that you won’t incur an amount of debt you can’t manage when adding a mortgage to your expenses. Creating a basic budget for housing might seem intimidating for some first-time buyers, but it’s actually pretty straightforward. All you need to do is factor in your current monthly expenses and subtract that amount from your monthly income.
- Factor in additional costs – When trying to determine how much you can afford, it’s important to take additional expenses into account, including property taxes, homeowner’s association fees, and homeowner’s insurance. First-time home buyers will also need to buy new appliances and materials like window coverings and other essential items that aren’t included in the home. For older homes, you will need to factor in maintenance costs. A good rule of thumb to follow is to try and set aside 1% of your home’s total value to use on annual repairs and maintenance.
- Consider more affordable down payment mortgage options – For most first-time home buyers, saving up for a high down payment to purchase a home can be challenging. The good news is, with the right steps, you might be able to get a low down payment requirement.
Thanks to more flexible mortgage programs requiring lower down payments, the average down payment for first-time homebuyers has already declined in the US over the past several years. It’s a good idea to look into getting qualified for an FHA loan program or a conventional loan, which offers relatively low down payments.
- Create a list – Lists can be your best friend during a house hunt. Before you start looking for a home, create two lists. The first one should include essential features, such as number of bedrooms/bathrooms, lot size, and type of location. Use the second as your “wish list,” and jot down things you’d like to have but aren’t really necessary, like an outdoor grilling area, swimming pool, access to nearby amenities, and so on. It’s important to keep in mind that there’s a slim chance that you’ll get everything in your wish list, but it can help you and your broker during your home search.
- Stay updated on current home prices and market conditions – Home prices continue to increase in most areas of Oregon, which is definitely something first-time home buyers should watch out for. Take a look at real estate market forecasts and consult your agent to determine the right timing for a home purchase.
Need help looking for the perfect home in Southern Oregon? Call Ashland Homes today to fulfill your real estate goals! Get in touch with the team by calling 800-334-7499 / 541-482-0044, or send an email to info(at)ashlandhomes(dotted)com