Most homebuyers only start executing an actionable plan when they are finally ready to shop for a new home. But if you’re a first-time homebuyer in the Portland Metro area and you are still 6 to 12 months from house shopping, you are CURRENTLY in the perfect position to take action. Don't wait! 

This crucial lead-time allows you to build a solid financial profile that will make you a strong, attractive buyer BEFORE you actually dive into the local market. See below for your actionable, step-by-step plan.

1. Master Your Credit Score

Your credit score is the single most important factor determining your mortgage interest rate, which translates to thousands of dollars over the life of your loan. This is the time to optimize it.

• Audit Your Credit Report: Request a free copy of your credit report from all three major bureaus (Equifax, Experian, and TransUnion) and dispute any errors or inaccuracies immediately.

• Pay Down High-Interest Debt: Focus aggressively on paying down revolving debt (like credit cards). Aim to keep your credit utilization (the amount you owe vs. your total limit) at least below 30%. And ideally below 10%, as this significantly boosts your score.

• Do Not Open New Credit: Resist the urge to open any new credit cards, lines of credit, or finance a major purchase (like a new car). New credit inquiries can temporarily lower your score, and new debt will negatively impact your debt-to-income ratio (DTI). Speaking of DTI…

2. Calculate and Reduce Your Debt-to-Income (DTI) Ratio

Lenders use your DTI to assess your ability to manage monthly payments. A lower DTI means a better chance of approval and a better rate.

• Calculate It: Add up all your minimum monthly debt payments (student loans, car loans, credit cards, etc.) and divide that by your gross (pre-tax) monthly income.

• Target a Low Ratio: While some programs allow for a higher DTI, you should aim for a DTI of 36% or less to be in the strongest position for the best loan terms.

3. Assemble and "Season" Your Down Payment & Closing Funds

First, let’s define closing costs: these are the mandatory, one-time fees paid at the end of the home purchase (the "closing") that cover all the administrative, legal, and lending services required to process the mortgage and officially transfer the property into your name.

That means, you need more than just a down payment; you need cash for closing costs (2–5% of the purchase price).

• Save Aggressively: Create a strict budget and set up automated transfers to a dedicated high-yield savings account. Treat this savings transfer like any other mandatory bill.

• "Season" Your Money: Lenders want to see that the funds in your bank account have been there for at least 60 days—this is called "seasoning." Avoid large, un-sourced deposits during this time. If you plan to use a financial gift from a family member, let your lender know early, as special documentation (a "gift letter") will be required.

4. Organize and Prepare Your Documents

Lenders will require extensive financial documentation for pre-approval. Get it ready now to save yourself weeks of scrambling later.

• Gather Key Financials: Collect two years of tax returns (including all W-2s and 1099s), the last 30 days of pay stubs, and the last 60–90 days of bank and investment statements.

• Create a File: These days, a digital file will suffice. But it’s probably not a bad idea to also keep hard copies and digital scans of these documents organized in a secure file so you can provide them to your lender instantly.

5. Start Researching and Learning the Portland Market

Familiarity with the Portland Metro market will inform your budget and search area.

• Attend Open Houses: Start attending open houses now, even if you’re not ready to buy. This gives you a realistic view of what your target budget actually buys in different neighborhoods (e.g., Beaverton vs. West Linn) and helps you refine your list of must-haves.

• Connect with a Real Estate Broker: Interview a few local agents who are skilled at working with first-time buyers. Because you are being proactive, a good broker will use this longer runway to educate you on all the nuanced aspects of selecting and buying the right home for your needs, and will help you set realistic expectations.

By focusing on these five steps over the next 6-12 months, you will significantly strengthen your financial standing, streamline the eventual mortgage process, and gain a competitive edge when it’s time to find your new home in our little corner of the Pacific Northwest.

-Matt Smith, Real Estate Advisor | Cascade Hasson Sotheby's International Realty