The Game PlanTo Home Ownership

Which buyer are you?

Find your starting line. Different buyers need different plays.

Before we run anything else, let's figure out who's reading this. The path to a house looks different depending on where you're starting from. Three main types of buyers go through this course.

Most of this course applies to all three of you. But Module 9 dives into move-up buyers and downsizers specifically because the strategy is different when you already own a home — you have equity, you have a current mortgage, and you have one foot already on the field.

First-time buyers: read modules 1 through 8 in order. Skip nothing.

Move-up buyers and downsizers: skim modules 2 and 4 (you've done this before), then read 5, 7, and 9 carefully. That's where the new info lives for you.

Get your credit ready.

Hit the score that unlocks the best rate. Every point matters.

Your credit score does two things in a home purchase. First, it decides whether you qualify at all. Second — and this is the part most people don't realize — it decides how much you pay every month for the next 30 years.

Why your score matters

Generally speaking, a stronger credit profile opens up more loan options and more favorable terms, while a lower score can narrow your options or come with less favorable terms. Exactly where any given score lands you — which programs you qualify for, and what terms you're offered — depends on the lender, the loan program, and current market conditions. This changes often and varies by lender, so it's purely educational to describe here; a licensed lending professional can tell you exactly where you stand once they pull your credit.

What actually moves your score

Your FICO score is calculated from five things, weighted as follows:

• Payment history — generally the single biggest factor; every on-time payment helps, and a missed payment can cause a meaningful drop.
• Credit utilization — how much of your available credit you're using. Keeping balances low relative to your limits is generally one of the fastest ways to help your score.
• Credit history length — the average age of your accounts. Don't close old cards even if you don't use them.
• Credit mix — having both revolving (cards) and installment (loans) accounts. A smaller factor, but still relevant.
• New credit — hard inquiries when you apply for new credit. Many buyers avoid opening new accounts in the months before a mortgage application.

The 90-day credit prep playbook

If you want to work on your score before applying for a mortgage, here's a general playbook. This is educational information, not a guarantee of any specific score outcome.

1. Pull all three reports at annualcreditreport.com. Free by federal law. Print them. Look for errors.
2. Dispute every error in writing. Wrong balances, accounts that aren't yours, late payments you didn't actually make. The bureaus have 30 days to investigate.
3. Pay down revolving balances as low as you reasonably can relative to their limits. Lower is generally better. Paying down balances shortly before your statement closes can help the lower balance be what gets reported.
4. Don't close any accounts. Even old cards you don't use. Closing them shortens your history and raises your utilization ratio.
5. Don't open new accounts. No new cards, no car loans, no store credit, no "buy now pay later." Every hard inquiry can cost a few points.
6. Pay every bill on time, every month. Set up auto-pay for at least the minimum so you never miss a date by accident.
7. Consider becoming an authorized user on a strong account. If a family member has a card with a long history of on-time payments and low utilization, adding you as an authorized user can sometimes help. Ask a credit professional whether this fits your situation.
8. Re-pull your score at day 45 and day 90. You're tracking the move. If it's not going up, something else may be dragging — find what, ideally with a credit professional's help.

How much home can you really afford?

The honest math. Not just "what you qualify for."

A lender's pre-approval tells you the maximum they're willing to lend based on their underwriting guidelines. That's a different question from how much house fits comfortably in your life — with room for savings, emergencies, and everything else a paycheck has to cover.

How lenders generally look at affordability

Lenders use a metric called debt-to-income ratio (DTI) — your monthly debt payments divided by your gross monthly income — to help determine how much you qualify to borrow. There's a version that looks at housing costs alone, and a version that looks at all of your debt together. The exact thresholds vary by lender, loan program, and your individual credit profile, and change over time, so this is purely educational — a licensed lending professional can tell you your actual qualifying number.

A more conservative affordability check

Here's a general framework some buyers find useful when deciding what they're personally comfortable spending — independent of what a lender might approve:

1. Start with take-home pay. Not gross. After taxes, after retirement contributions, after health insurance. The actual money that hits your account.
2. Consider capping total housing at a level well below what you're approved for. That includes principal, interest, taxes, insurance, HOA, and mortgage insurance if applicable. What feels comfortable is personal — a financial advisor can help you land on a number that fits your goals.
3. Budget for ongoing maintenance. Repairs and upkeep are an ongoing cost of homeownership that varies widely by home age, condition, and location — worth building into your budget rather than treating as a surprise.
4. Leave room for "everything else" after housing and existing debts. Groceries, gas, utilities, kids, fun, savings. If a home price makes that number too thin, it may be worth looking at a different price point.

What's in a monthly payment (PITI + more)

Your monthly mortgage payment isn't just principal and interest. It's PITI, plus sometimes more.

• P — Principal — the part of the payment that reduces the loan balance.
• I — Interest — the part the lender earns. Typically front-loaded early in the loan.
• T — Taxes — local property taxes, usually divided into 12 monthly payments and held in escrow.
• I — Insurance — homeowner's insurance, usually divided into 12 and held in escrow.
• MI — Mortgage insurance — often required on FHA loans and on conventional loans below a certain down payment threshold, per current program rules — ask your lender for specifics.
• HOA — Homeowners association dues — applies to condos, townhomes, and some single-family neighborhoods. Paid directly, not through the lender.

How a mortgage payment is generally calculated

For a fixed-rate loan, lenders use a standard amortization formula based on the loan amount, interest rate, and term. You don't need to memorize it — any mortgage calculator runs it for you, and your lender will show you the exact number for your loan.

The general pattern to understand: in the early years of a 30-year loan, a large share of each payment goes to interest rather than principal. That share shifts toward principal over time. This is part of why making occasional extra principal payments, when your budget allows, can shorten a loan's timeline — though you should confirm with your lender that extra payments are applied the way you intend.

Save the down payment.

And find the help that's out there. There's more than you think.

The idea that you need a large down payment to buy a house is one of the most common misunderstandings in homebuying. Many buyers put down far less — sometimes significantly less, depending on the program. What's right for you depends on your situation and your lender's guidance.

What you may need at closing

Closing costs generally include your down payment plus a set of one-time fees. Specific amounts vary widely by market, lender, and transaction — your lender and escrow officer will give you exact figures for your purchase. Categories to expect include:

• Down payment — the portion of the price not financed by the loan.
• Loan origination fees — what the lender may charge to make the loan.
• Discount points — an optional way to pay extra upfront to potentially lower your rate — ask your lender if this makes sense for you.
• Appraisal — paid to a licensed appraiser to confirm the home's value.
• Home inspection — you hire this yourself. Strongly recommended even when not required.
• Title insurance — protects against title defects. Usually required by the lender.
• Escrow / closing fees — the neutral third party handling money and paperwork at closing.
• Recording fees — county charges for recording the deed.
• Prepaid taxes & insurance — the lender collects some amount upfront to fund your escrow account.

Total closing costs vary and are best confirmed with your lender and escrow company, who will give you exact figures for your specific transaction and today's market.

Where people commonly save

If you're 12+ months out from buying, here are common options worth discussing with a financial professional:

• High-yield savings account (HYSA) — FDIC insured, liquid, a common default for down payment savings.
• Money market account — similar profile to a HYSA; some allow limited checks.
• Short-term Treasury bills (T-bills) — backed by the U.S. government, with lock-up periods ranging from weeks to about a year.
• Roth IRA (with caveats) — certain first-time homebuyer withdrawal rules may apply. This has real tax implications — talk to a CPA or financial advisor before touching retirement funds for a home purchase.

Money you'll need within 1-3 years is generally kept out of volatile investments. A financial advisor can help you think through the right vehicle for your specific timeline.

Sources of down payment funds lenders commonly accept

• Your own savings
• Gift funds from immediate family (requires a gift letter — ask your lender for their exact requirements)
• Tax refund
• Sale of a documented asset
• Down payment assistance program funds (see Module 6)
• Employer assistance programs (some companies offer this)
• Retirement account withdrawal (talk to a CPA first — this has tax consequences)

Lenders generally want funds to be "seasoned" (sitting in an account for a period of time) and fully documented. Your lender will tell you their exact requirements.

Loan programs explained.

FHA, conventional, VA, USDA, and more — a general overview.

There isn't "one mortgage." There are several main loan program categories in the U.S., each generally designed for a different kind of buyer. Which one fits you is a conversation to have with a licensed lender — this module is here so you walk into that conversation informed, not so you diagnose yourself.

A general overview of loan program types

1. Conventional loans

Often backed by Fannie Mae or Freddie Mac rather than the government directly. Generally most competitive for buyers with strong credit and a larger down payment, though low-down-payment options exist for first-time buyers under certain programs.

• Down payment: Programs exist with lower down payment requirements for eligible first-time buyers; ask your lender what's currently available.
• Credit: Requirements vary by lender and program.
• Mortgage insurance: Typically required below a certain equity threshold; generally removable once you reach sufficient equity.
• Loan limits: Set annually and vary by county — verify the current limit for your area at FHFA.gov or with your lender.

2. FHA loans

Backed by the Federal Housing Administration. Often has more flexible credit requirements and a lower minimum down payment than conventional financing, which is why it's common among first-time buyers.

• Down payment: Generally lower than conventional; exact minimums depend on current FHA guidelines and your credit profile.
• Mortgage insurance (MIP): Often required under current rules — ask your lender about current requirements and how long it applies.
• Loan limits: Vary by county — verify with your lender or HUD.gov.

3. VA loans

For active-duty military, veterans, and certain surviving spouses, subject to eligibility.

• Down payment: Can be significantly reduced or eliminated for eligible borrowers — ask a lender experienced in VA loans for current specifics.
• Funding fee: A one-time fee generally applies and can often be financed into the loan — your lender can quote the current fee.
• Best discussed with: A lender experienced in VA loans, using your Certificate of Eligibility.

4. USDA loans

Backed by the U.S. Department of Agriculture, for eligible rural and some suburban areas — eligibility maps are often more generous than people expect.

• Down payment: Can be significantly reduced or eliminated for eligible borrowers.
• Income limits typically apply based on area median income — ask your lender for current limits in your area.
• Property must be in a USDA-eligible area — check the USDA eligibility map or ask your lender.

5. Jumbo loans

Loans above the conforming limit, used for higher-priced homes. Not government-backed, and underwriting is often stricter.

• Down payment: Generally higher than conventional financing — ask your lender for current requirements.
• Credit and reserves: Typically stronger credit and larger cash reserves are expected.

Down payment assistance programs.

California and Arizona. There's more help out there than you've been told.

Down payment assistance (DPA) programs help eligible buyers cover part of their down payment and/or closing costs. They generally come in three forms: grants, forgivable loans, and second mortgages. Availability, funding, and rules change often — always verify current details before relying on any program named here.

Types of California programs to ask about

California runs DPA activity largely through CalHFA (California Housing Finance Agency), with programs that have historically included deferred-payment junior loans, shared-appreciation loans, and forgivable equity-builder loans for qualifying first-time and lower-income buyers, plus special programs for some public employees. Many California cities and counties (Los Angeles, San Diego, San Francisco, and others) also run their own local DPA programs.

Types of Arizona programs to ask about

Arizona DPA activity includes state-level programs (such as those run through the Arizona Industrial Development Authority) and county/city-level programs like those historically offered in Maricopa and Pima counties, plus city programs such as Phoenix's homebuyer assistance offerings. Other Arizona cities often run their own versions.

Other resources worth asking about

• HUD programs for public servants — HUD has historically offered discounted-home programs for teachers, law enforcement, firefighters, and EMTs in qualifying areas.
• Non-profit lending programs — some non-profits offer no-down-payment or reduced-cost mortgage paths with their own underwriting process.
• State and federal first-time-buyer incentives — these change with legislation; check current options at IRS.gov and your state's housing finance agency site.

How DPA programs can work together

In some cases, buyers combine an FHA (or other) first mortgage with a DPA program covering some or all of the down payment, plus seller-paid closing cost credits negotiated as part of the purchase contract. The exact combination that's available to you depends on the current programs, your lender, and your specific file — a qualified, licensed lending professional can walk you through what's realistically stackable right now.

Get pre-approved.

The right way, with the right lender.

A pre-approval is a lender's written confirmation that they're prepared to lend you a specific amount, based on a full review of your finances. It's how you go from "looking" to "shopping with money in hand." Most sellers expect one before taking an offer seriously.

Pre-qualification vs. pre-approval (not the same thing)

	Pre-qualification	Pre-approval
What it is	Estimate based on info you tell them	Approval based on documents they verify
Credit pull?	Soft pull or none	Hard pull
Documents required?	No	Yes — taxes, pay stubs, bank statements
How long it takes	Minutes	Typically a few days
Carries weight with sellers?	Not always	Generally yes

Aim for pre-approval, not just pre-qualification. In many markets, pre-qualifications carry less weight when offers come in.

Documents lenders commonly ask for

• Recent W-2s (or 1099s if self-employed)
• Recent federal tax returns
• Recent pay stubs
• Recent bank statements (all accounts)
• Recent statements for retirement and brokerage accounts
• Government ID
• If self-employed: profit & loss statement
• If using gift funds: gift letter and donor documentation
• If divorced: divorce decree and any support orders
• If you've had a bankruptcy or foreclosure: documentation and discharge date

Your lender will tell you exactly what they need for your specific file.

Consider comparing more than one lender

Mortgage rates and fees can vary between lenders for a similar borrower. Comparing offers from a few different lenders is a common way buyers work to find favorable terms — the Consumer Financial Protection Bureau publishes general guidance on shopping for a mortgage that's worth a look.

Types of lenders people commonly compare

• Banks — larger institutions; sometimes offer relationship discounts to existing customers.
• Credit unions — sometimes offer competitive fees and rates to members.
• Mortgage brokers — shop multiple wholesale lenders on your behalf.
• Mortgage bankers / direct lenders — originate loans directly.
• Online lenders — convenience-focused, sometimes competitive pricing.

How to compare lender quotes

Don't compare rate alone. Ask each lender for a Loan Estimate — a standardized form lenders are required to provide within 3 business days of a complete application. It shows the rate, APR, monthly payment, closing costs, and cash needed to close, side by side.

APR often tells a fuller story than the advertised rate alone, since it factors in certain fees — ask your lender to walk you through both numbers.

A note on credit and shopping for a mortgage

FICO scoring models generally treat multiple mortgage inquiries made within a short window (commonly cited as around 14-45 days, depending on the scoring model) as a single inquiry, specifically so that rate-shopping doesn't unfairly penalize your score. Ask your lender or a credit professional for specifics if you're concerned about the impact of shopping multiple lenders.

The buying process, step by step.

Search to keys in your hand. The whole arc, demystified.

From the moment you start touring homes to the moment you get the keys commonly takes somewhere in the range of 45 to 75 days, though timelines vary by market and transaction. Here's a general outline of what happens at each stage.

A general step-by-step timeline

1. Pre-approval secured. You have your written pre-approval. We agree on your must-haves and nice-to-haves.
2. Property search. We send you listings. You tour the ones you like. Most buyers see several homes before finding "the one."
3. Make an offer. We write the offer, including price, contingencies, closing date, and any concessions you want the seller to consider.
4. Offer accepted / countered / rejected. Sellers can accept, counter, or reject. Negotiation often goes through one or more rounds.
5. Contract signed → escrow opens. A neutral escrow company holds your earnest money deposit and coordinates closing.
6. Home inspection. You hire a licensed inspector. We negotiate any repairs or credits based on findings.
7. Appraisal ordered by lender. The lender hires an appraiser to confirm the home's value supports the loan amount.
8. Loan underwriting. The lender's underwriter verifies your documentation. Respond quickly to any requests for more information.
9. Title search and insurance. The title company confirms the seller can convey clear title, and title insurance protects against undiscovered claims.
10. Clear to close. The underwriter signs off and the loan is approved.
11. Final walk-through. You confirm the home is in the agreed-upon condition before closing.
12. Closing day. You sign the closing documents and your funds are transferred; the deed is recorded with the county.
13. Keys. The home is yours.

What "contingencies" mean

Contingencies are conditions in your offer that generally let you cancel under specific circumstances, often while protecting your earnest money. Common ones include:

• Inspection contingency — the ability to address issues found in inspection.
• Appraisal contingency — relevant if the home appraises below your offer price.
• Financing contingency — relevant if your loan doesn't come through.

In competitive markets, some buyers choose to waive certain contingencies to strengthen their offer. This is a meaningful decision with real risk — talk it through carefully with your agent and, where relevant, an attorney, before waiving any contingency.

What we do as your agent

• Set up a custom property search based on your criteria
• Tour homes with you
• Pull comparable sales to help inform your offer price
• Write and submit your offer
• Negotiate counter-offers on your behalf
• Help coordinate inspections and other diligence
• Help keep the escrow timeline on track
• Help negotiate repairs and credits
• Attend the final walk-through with you
• Attend closing with you

Move-up buyers and downsizers.

Different game, same rules. Strategy for buyers who already own.

If you already own a home and you're moving — bigger house, smaller house, different city — the strategy changes. You have equity, an existing mortgage, and a need to coordinate selling and buying carefully.

For move-up buyers

The two-house problem

Most buyers can't comfortably carry two mortgages at once, so timing selling and buying matters. Common approaches, worth discussing with your agent and lender:

1. Sell first, then buy. Often the cleanest path financially, though it may require short-term housing between sales.
2. Buy with a contingency on selling. Your purchase offer is contingent on selling your current home — more common in slower markets.
3. Buy first using a bridge loan. A short-term loan against your current home's equity to fund the new purchase, generally at a higher cost. Ask a lender whether this fits your situation.
4. HELOC on your current home. A home equity line of credit set up before you list, sometimes used toward the down payment on the new home.
5. Buy first, rent your old home. Only works if you can qualify for the new mortgage without counting rental income, which many lenders won't do right away. This also makes you a landlord — worth thinking through carefully.

Capital gains on your home sale (talk to a CPA)

The IRS offers a capital gains exclusion for a primary residence you've owned and lived in for a qualifying period, which can shelter a significant amount of gain from taxes for eligible sellers. The specific rules, thresholds, and whether you qualify depend on your situation — this is a conversation for a CPA or tax attorney, not something to rely on general information for.

For downsizers / empty-nesters

The downsizer's general advantage

If you bought your home many years ago, you may be sitting on substantial equity. Common patterns for downsizers:

• The home has often appreciated significantly
• The mortgage balance is often small or paid off
• Selling can generate significant proceeds, potentially with a meaningful tax exclusion (confirm with a CPA)
• The next home may be purchased with cash or a smaller mortgage
• Monthly expenses often drop — smaller home, smaller utilities, often lower property taxes

What downsizers may want to think about

• Where to next? Some downsizers relocate to lower-cost areas or states; this is a personal and financial decision worth discussing with your agent and a financial advisor.
• Property tax portability. Some states, including California, have rules that may let certain homeowners transfer part of their existing property tax basis to a new home under specific conditions. Rules change and eligibility varies — verify current details with a tax professional or your county assessor.
• Estate planning. Downsizing is often a natural moment to revisit your will, trust, and beneficiary designations with an estate attorney.
• What to do with sale proceeds. A fee-only fiduciary financial advisor can help you think through the next 20+ years, rather than leaving a large sum sitting in a checking account.
• Single-story homes. If you plan to stay long-term, some buyers prioritize single-story floor plans for long-term accessibility.

1031 exchanges (investment property only)

1031 exchanges apply to investment properties, not primary residences, and involve strict timelines and a qualified intermediary. If you also own rental property, talk to a CPA or real estate attorney before considering this — it's a specialized area with real deadlines and real consequences if done incorrectly.

Wherever you are, here's what comes next

You've read the whole course. You know which buyer you are. You have a framework for thinking about your credit target, what you can afford, which loan programs might fit, what DPA can do, how to compare lenders, and how the buying process works.

Now it's time to make it real.

1. Pull your credit reports this week.
2. Work through the affordability thinking in Module 3 honestly, for your own life.
3. Start the 90-day credit prep playbook if it applies to you.
4. Open a savings account specifically for the down payment.
5. When you're ready, get pre-qualified with a qualified, licensed lending professional.
6. Once you're pre-qualified, reach out to us and we'll start your home search together.

— Coach