Coming up with the cash needed to earn that 20% down payment for a home is increasingly becoming difficult. As home prices increase steadily, more than 30% during the past five years. Thus, 20% down payment could actually mean at least $40,000 for a median home or at least $100,000 for a home in the high-cost metropolitan areas. However, if you can pay less than the optimal 20% down payment, your mortgage may be slightly out of reach.

Nonetheless, your dream house should not be a mission impossible! Follow these money tips and reach for the home of your dreams:

Your Credit Score

A good credit score increases your chance of still getting approved for a mortgage if you can pay less than 20% deposit. In fact, if you have a FICO credit score of at least 760, you can increase your chance of getting a mortgage with just a 5% down payment. To build and maintain a good credit score, always pay your bills on time, avoid missing payments, and try maximizing credit card payments every month. You should also know that even a debt that has been fully paid stays on your record for seven years. Thus, you may need to wait for some time until your payment history has been better and your credit score higher.

Your Existing Personal Loans

Creditors will also look at your existing personal or consumer loans. If you have a relatively large sum of personal debt, you increase your odds of reaching a mortgage. Lenders might think that with an already high amount of debt you owe, you may not be able to accommodate another loan. Hence, consider paying off a large chunk from your outstanding balance.

Your Budget

Lastly, you also need to prove to the creditor that you can make a room for your mortgage payment in your budget. They'll examine your total budget if your current income can pay for your bills, living costs, and the tentative mortgage repayments. Accordingly, you should also adjust your budget to be able to pay for your mortgage by earning an additional income, cutting back expenses, or both. It might help to inform your creditor too about receiving bonuses that you intend to allocate for mortgage payments. Checking mortgage rates in your area regularly is a good idea since lower interest rates will mean that you can stretch your income further. 

A slightly out of the reach mortgage should not let your dream house be just a dream. You can make your most coveted home sweet home yours by maintaining a good credit score, paying off existing loans, and adjusting your budget for mortgage repayments.