Miniature House on stack of coinsMiniature House on stack of coins


By: SunnyHill Financial

Finding the balance between saving or paying off debt first can be tricky. It is always important to evaluate your finances early so you can improve your chances of being approved.

You might be asking yourself what is the right amount of debt, while also having a healthy down payment?

We are here to help offer some guidance on how to tackle this question.

Saving for a Down Payment

When it comes to saving, having more cash in your pocket is never a bad idea. It is never too early to start saving for you for your down payment even if your mortgage finances 100% or you have a low-down payment option.

The downside can be as you continue to save there is a large amount of cash sitting there that could be used to pay other expenses. You need to make sure saving for a down payment fits your lifestyle and allows you to cover all your finances.

It is important to determine the amount needed for a down payment. While you may have a certain amount in mind to save, in reality you may not need to put down this much to buy your home. You may be required to put down less than this amount when financing, due to your financial portfolio.

Our mortgage calculator can help you think through scenarios and get a clearer picture of what amount your ideal down payment is. To learn more about how the mortgage calculator works visit our blog on The Mortgage Calculator and How it Will Help You.

Paying Debt First

You do not need to be debt free to purchase or refinance a home. It is important to evaluate what you are defining as debt. Are these credit cards? Student loans? Car loans? The list can go on and on. Looking at your financial portfolio and finding key areas that are impacting your credit score can help you determine which areas you may want to focus on.

If you have credit cards that are at their limit, paying them down can help increase your credit score. If you pay them off and close them this may negatively impact your credit score. The rule of thumb is you want to try to keep your credit lines below 30% of their limit.
We are always here to help you determine what may be the best strategy for you. It is never too early to start having conversations regarding your financial health and how it impacts your mortgage.