A debt-to-income ratio (DTI) of no more than 50%. Increase your credit scores instantly Do you pay your rent online? Now you could increase your credit scores instantly. An ARM may offer a lower initial interest rate than a fixed-rate mortgage. However, if your credit isn't in good shape, your rate will still be higher than you could qualify with a better credit score.
Check your credit score to see what your situation is and get a copy of your credit report to determine what areas you might need to address. Learn what it takes to achieve a good credit score. If you have an established credit history, a FICO score of more than 660, and a down payment of at least 10%, you may qualify for an ARM loan. You'll also need to comply with established guidelines for income and other personal financial information.
Victoria Araj is a section editor for Rocket Mortgage and held positions in mortgage banking, public relations and more during her more than 15 years with the company. An important decision you'll have to make when you're about to buy a home is whether you want to get a fixed-rate mortgage or an adjustable rate mortgage (ARM). Adjustable-rate mortgages may be a better option than fixed-rate mortgages for borrowers who expect to move before the end of their ARM's fixed-rate period. Fixed-rate mortgage loans are often more popular than adjustable-rate mortgages because they offer more predictability.
If you're looking for a mortgage but aren't sure about your options, it might be time to look for a home loan broker.