by What could Affect My Purchase?
How Do I Set a Budget?
Step 1: Pre-Qualification for a Mortgage
Before viewing properties, request a pre-qualification letter from your bank or mortgage provider. This letter indicates the amount you are approved to finance.
Remember: The bank will only lend up to the appraised value of the property, which will serve as collateral.
Step 2: Establish Your Budget
Consider these four key factors:
The amount approved in your pre-qualification letter
Your available savings for the down payment and closing costs
Your credit history and score
The type of property you want
Step 3: How Much Should I Save for the Down Payment?
The down payment depends on the type of loan. Here are the most common options:
| Loan Type | Down Payment Percentage |
|———————|——-
| FHA | 3.5% |
| Second Home | 10% |
| Conventional | 15% – 20% |
| VA (Veterans) | 0% |
| Rural Loans | 0% |
Example:
For a $200,000 home:
FHA: $7,000
Second Home: $20,000
Conventional: $30,000–$40,000
Tip: Also set aside approximately $1,000 for appraisal, credit checks, and other preliminary fees.
Step 4: Estimate Closing Costs
Expect these to be between 3% and 6% of the purchase price.
Example:
$200,000 x 0.06 = $12,000
In some cases, the seller may contribute toward closing costs (e.g., FHA concessions up to 6%, conventional up to 3%, VA up to 4%).
Step 5: What Could Affect Your Loan Approval?
Credit Factors:
Late payments or maxed-out credit cards can hinder approval.
Property Factors:
Physical or legal issues with the property can impact financing, such as:
Septic tanks or structures built without permits
Encroachment issues
Flood zone location
Homes without proper access or with irregular water/electric services
Major repairs needed (roof, wiring, incomplete kitchens)
Old electrical panels or corroded pipes
Some conditions can be financed through specialized loans like FHA 203K, provided permits are in place.
Step 6: Legal and Due Diligence Checks
Clear ownership title
No inheritance or divorce complications
Proper appraisal and registration in the CRIM (Puerto Rico’s property registry)
Verify if the seller is a non-resident
Watch out for properties with improper tax exemptions or that are vacant
Final Recommendations for a Successful Purchase:
Consult your banker about estimated monthly payments
Budget for a professional home inspection ($300–$1,200)
Hire a real estate agent to guide you and avoid mistakes
Be patient—each transaction is unique and may require additional documentation
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