Take these steps to get ready for a Habitat for Humanity application cycle!
Step 1: Check your credit report
Negative items on the credit report are the most common reason that applications are denied. Before you apply, check your credit report for free at www.annualcreditreport.com. We recommend requesting a credit report from all 3 bureaus: Equifax, Experian, and TransUnion.
The following items may cause your application to be denied:
- PAST DUE accounts
- Accounts in COLLECTIONS
- CHARGED-OFF accounts
- BANKRUPTCY in the last 5 years
- FORECLOSURE in the last 3 years
Creditors often will hire a collection agency after a borrower is 60–90 days or more past due with a debt. Learn more at investopedia.com.
A charge-off means a company has written off a debt because it does not believe it will receive the money that it’s owed. You are still responsible for paying debt that is a charge-off. Learn more at investopedia.com.
Watch the video below or visit consumerfinance.gov for more information about checking your credit report for free.
Step 2: Calculate your debt-to-income ratio
Your debt-to-income ratio (DTI) is all your monthly debt payments divided by your gross monthly income. This number is one way lenders measure your ability to manage the monthly payments to repay the money you plan to borrow.
Use the calculator below to estimate your DTI.
This calculator is only an estimate. We cannot answer questions about your DTI or determine if you qualify until we review your full application.
Watch the video below or visit consumerfinance.org to learn more about debt-to-income ratio.
Step 3: Get financial education
If you have a high DTI or negative items on your credit report, credit counseling can help! The following organizations are certified by the US Department of Housing and Urban Development (HUD) to provide credit counseling:
Phone: 770-790-3112
Email: housingcounseling@ccatlanta.org
Visit their website: https://catholiccharitiesatlanta.org/housing-counseling/
Phone: 866-889-9347
Visit their website: https://www.moneymanagement.org/credit-counseling
We also recommend the FDIC (Federal Deposit Insurance Corporation) online financial education program: How Money Smart Are You?
Visit https://playmoneysmart.fdic.gov/games to play and learn!
Step 4: Save money
Habitat for Humanity homebuyers are required to pay an estimated $5,500 in closing costs.
A minimum of $1,500 must be paid at the time of closing, while the remaining amount can be repaid monthly over the first 4 years of homeownership through a 0% interest loan from Habitat.
Saving money for closing costs and a down payment can also help you qualify for a conventional loan. The more you pay upfront, the lower your future mortgage payment will be!