The first step to consider when buying a home, before doing anything else, is looking at your savings.The amount of money you have saved determines how much you have available for down payment and Closing Costs, which directly affects almost every aspect of buying a home including the Interest Rates you qualify for as well as other qualifications.

• If you can put a large down payment and cover Closing Costs and finance the rest, your loan choices include such varied programs as conventional Fixed Rate loans, Adjustable Rate Mortgages, VA, FHA, graduated payment Mortgages and all the varieties of each. If you have to borrow money for either the down payment or Closing Costs or both, your choices are more limited.
• If you save enough money to put down 20% of the Purchase Price of the home, you can forgo what is known as PMI (Private Mortgage Interest). It protects the Lender against a loss if a borrower defaults on the loan. It is usually required for loans in which the down payment is less than 20 percent of the sales price or, in a Refinancing, when the amount financed is greater than 80 percent of the Appraised Value.If you can forgo PMI, then your monthly Mortgage payment will decrease.
• The down payment affects which Interest Rates you qualify for. Mortgage Lenders will be able to help to find which one you qualify for. If you shop Lenders by phone, the loan officer will be able to tell which programs fit and quote you rates accordingly.
• Finally, your down payment also affects your ability to qualify for a loan. Lenders are more lenient if a larger down payment is made, however more stringent rules apply for smaller down payments.

As you can see, having a good savings before buying a home is to your advantage. It can give you more options and save you money and frustration down the line.