Your DTI is the amount you pay toward debts each month, divided by your gross monthly income. The most important factor for boosting your score is to pay all your bills on time. But you can land a better interest rate with a higher score. Many lenders require a minimum credit score of 620 to receive a mortgage. Mortgage rates should stay low for a while, so you may have time to save a bigger down payment. But lenders reward a higher down payment with a better interest rate. With a conventional loan, you may be able to put down as little as 3%. Here are some tips for landing a good interest rate on your mortgage: How to get a low interest rate on your mortgage Shop around for a company that will offer the best interest rate and charge relatively low fees. A different lender may offer you a better deal the second time around. You may decide to refinance with the same lender that gave you your initial mortgage, but it's not always the best idea. Mortgage refinance rates are at all-time lows right now, so it could be a good idea to switch your current mortgage for one with a better interest rate - especially if the new rate would be significantly lower. Veterans Affairs mortgage:These mortgages, also called VA loans, are for active-service military members or veterans, or spouses of members who have died and can provide lower interest rates than conventional mortgages.United States Department of Agriculture mortgage:These loans, also called USDA loans, can be useful if you are a low-to-moderate income borrower looking to buy a home in a rural or suburban area.Federal Housing Administration mortgage: You can get a down payment of 3.5% with a credit score of at least 580, or get a mortgage with a credit score between 500 and 580 with 10% down using this loan, which is also called an FHA loan.Target Area Search: You may qualify for a low-interest mortgage if you're buying a home in certain parts of Ohio.You can combine this program with the YourChoice! or Grant for Grads program, if you choose the 2.5% down payment assistance option. Mortgage Tax Credit: Claim up to 40% of the interest you pay on your mortgage on your federal taxes, up to $2,000 per year.Ohio Heroes: You can get a discounted mortgage rate if you are an active military member, military veteran, firefighter (professional or volunteer), paramedic, EMT, police officer, nurse, nurse practitioner, physician, STNA, teacher (pre-K through grade 12), counselor, or administrator.Grants for Grads: This program is similar to the YourChoice! program, except the loan may be forgiven after five years if you've graduated from school in the last 48 months.The loan is forgiven after seven years as long as you still live in the home and haven't refinanced. YourChoice! Down Payment Assistance: Receive either a 2.5% or 5% loan for down payment assistance or closing costs.The Ohio Housing Finance Agency offers financial assistance if you get a mortgage through a participating lender. Use our free mortgage calculator to learn about how today's rates will affect your monthly payments.
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