Steps to Get Ready for Homeownership

September 30, 2026

Buying a home is a major financial commitment, and the preparation starts well before you begin the home loan process. Giving yourself 6 to 12 months or longer, if you need to strengthen your credit or build savings, can put you in a stronger position when you’re ready to buy. 

In this guide, we’ll cover the steps to get ready for homeownership, from reviewing your credit and paying down debt to saving for a down payment and planning for the costs of buying a home.

1. Decide When You Want to Buy

Before you start preparing to buy a home, think about when you'd like to make the purchase. Your target timeframe helps you gauge how much time you have to prepare financially before starting the mortgage process. 

It’s also important to consider major life factors that could affect your timeline, such as:

  • Plans to remain in the area

  • Upcoming career changes

  • Changes to your household or family

  • Major upcoming expenses

  • When your current lease ends

Leave some breathing room in your timeline. Starting early gives you time to address potential issues before applying for a home loan.

When to start: 6 to 12 months before you plan to buy a home.

2. Review Your Credit History

The information on your credit reports can affect your credit score. Before applying for a mortgage, check your credit reports from all three major credit bureaus (Experian, Equifax, TransUnion). Look for:

  • Incorrect account information

  • Accounts that don’t belong to you

  • Incorrect late payments

  • Other items that could negatively affect your credit

Mistakes can happen with credit reporting. If you spot incorrect information on one of your reports, file a dispute right away. Each of the three credit bureaus offers online forms you can submit. Credit bureaus generally have 30 days to investigate a dispute, although some investigations may take up to 45 days. 

When to start: 6 to 12 months before applying to give yourself time to identify and correct potential errors. 

3. Work on Improving Your Credit Score

Your credit score is an important factor lenders review when considering your mortgage application. A stronger score could also result in a better interest rate and loan terms. Even a small difference in your interest rate could save you thousands of dollars over the life of your loan.

Check your credit score to see where you stand. Your bank, credit union, or credit card issuer may provide you with this information. If your score could use some improvement, focus on: 

  • Paying all bills on time

  • Paying down credit card balances

  • Avoid taking on new credit card debt

  • Avoid unnecessary applications for new credit

  • Think carefully before closing long-standing credit card accounts, since doing so could affect your credit utilization 

Rebuilding credit can take time. The sooner you start, the more time you will have to improve your credit score before you’re ready to apply for a mortgage.

When to start: 6 to 12 months or more before applying if your credit needs improvement. 

4. Pay Down Debt

Another important factor lenders consider is your debt-to-income (DTI) ratio, which compares your monthly debt payments with your gross monthly income. There isn’t one DTI limit for every mortgage; requirements vary by lender and loan program. Your monthly debts may include: 

  • Credit cards

  • Auto loans

  • Student loans

  • Personal loans

  • Other debt

Paying down credit card balances or other debts can improve your DTI and leave more room in your monthly budget for a future mortgage payment. It’s also smart to avoid taking on major new debt before applying for a mortgage, since additional monthly payments can increase your DTI. 

When to start: 6 to 12 months before applying if you have balances you want to pay down. 

5. Save for a Down Payment

The down payment amount varies by mortgage program and home price. A 20% down payment isn’t required for every mortgage. Some programs allow down payments ranging from 0% to 3.5% for eligible borrowers. A larger down payment lowers the amount you need to borrow, which may also decrease the total interest you’ll pay. 

Consider keeping your down payment fund in a separate savings account from your emergency fund and everyday savings. This keeps the money earmarked for your future home and gives you a clear view of how your down payment fund is growing. 

Automatic transfers can make it easier to stay on track with your savings goal. With most banks and credit unions, you can set up automatic transfers from your checking account to your savings account each month. That way, you can consistently add to your down payment fund without having to remember to make each transfer manually. 

Some states and localities also offer down payment assistance programs that can lower upfront costs. Research programs available in your area, or ask your lender which ones you may qualify for.

When to start: Ideally 12 months or more before buying, since building a down payment can take time. Starting earlier gives you more time to save. 

6. Plan for Additional Home-Buying Costs 

A down payment is only one of several costs to plan for when buying a home. You may also need to plan for:

  • Earnest money deposit: Usually paid after an offer is accepted and typically applied to your down payment or closing costs at closing.

  • Homeowners insurance: Lenders generally require proof of coverage before finalizing your mortgage.

  • Mortgage insurance: Based on the type of mortgage, you may have upfront mortgage insurance or other fees.

  • Closing costs: These commonly range from 2% to 5% of the home purchase price.

  • Home inspection: An inspection can uncover problems before you close.

  • Moving expenses: You may need to save for movers, a rental truck, and packing supplies.

  • Repairs or improvements: The home may need minor repairs or upgrades after you move in.

  • Household necessities: You may need new appliances, furniture, or other items for your new home.

  • Utility deposits: You may have to pay deposits when setting up electricity, gas, water, internet, and other services.

It’s also a good idea to maintain a home repair emergency fund. Even if the home is in good condition and the home inspection didn’t turn up anything significant, unexpected repairs can happen at any time. Having cash reserves can protect your finances if a pipe bursts or your HVAC system or water heater needs replacing. It can also keep you from relying on credit cards or other loans to cover the expense. 

When to start: 6 to 12 months or more before buying so you can build these expenses into your savings plan. 

7. Gather Your Financial Documents

Gathering important documents before you apply for a mortgage can prevent unnecessary delays. Lenders may ask for:

  • Government-issued photo ID

  • Social Security number

  • Recent pay stubs

  • W-2s from the past two years

  • Tax returns from the past two years

  • Bank statements

  • Retirement and investment account information

  • List of current debts

If you are self-employed, you may need to provide additional documents to verify your income, such as business tax returns and profit-and-loss statements.

When to start: 1 to 3 months before applying to give yourself time to gather everything you need.

8. Learn About Mortgage Programs Before You Apply 

You don’t need to choose a mortgage months before buying a home, but learning the basic differences can give you a clearer picture of the credit, down payment, and eligibility requirements you may encounter.

Oxford FCU offers several home loan programs, including:

  • Fixed-rate mortgages: Keep the same interest rate for the life of the loan for more predictable principal and interest payments.

  • Adjustable-rate mortgages: Begin with a fixed introductory rate before annual rate adjustments begin.

  • FHA loans: Feature lower down payment requirements and broader credit guidelines.

  • VA loans: Eligible veterans, active-duty service members, and reservists may qualify for 100% financing.

  • USDA Rural Housing loans: Eligible buyers in qualifying areas may purchase with no down payment.

  • Maine State Housing Authority (MSHA) loans: Eligible Maine homebuyers may qualify for low interest rates, lower down payment requirements, and assistance with closing costs.

As you get closer to applying, Oxford FCU’s Mortgage Qualifier Calculator can give you a better sense of how much home may fit within your budget. 

When to start: About 3 to 6 months before applying so you have time to learn which mortgage programs you may qualify for.

Build a Strong Foundation for Homeownership

Preparing for a home purchase months in advance gives you time to strengthen your credit, lower debt, build your savings, and plan for the costs of buying and owning a home. You don’t have to tackle everything at once. Starting early gives you more time to make steady progress before you apply.

When you’re getting closer to buying, Oxford FCU is ready to guide you through the next stage of the homebuying process.

 

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