Looking to purchase a home? Experts give tips for getting a mortgage approval

FRESNO, Calif. (KFSN) -- Kelvin Ashford purchased his most recent home in April but understands the barriers to homeownership.

With rising home prices and tight lending standards, the path to owning a home is challenging, especially for low-to-median income borrowers and first-time homebuyers.

"You have to have a certain income to own a house. If the jobs are there for the community, and the stability of the job isn't there for the community, you won't have the revenue to purchase a house," said Ashford of Fresno.

While many families are eager to own their own home, not having a down payment and a good credit score is putting that dream out of reach.

"Life just happens," he said.

According to ABC30 data team's analysis of Home Mortgage Disclosure Act data, in the Fresno area between 2018-2019, 70 percent of approved home loans were for white applicants. That's compared to 63 percent for Black, 64 for Latino, and 66 for Asian applicants.

However, the gap is wider in 57 of 100 largest cities in the U.S

Steve Flach, president-elect of the Fresno Association of Realtors says the disparity can be explained by credit history and overall debt-to-income ratio.

"The National Association of Realtors has done some studies, one of which has found that African American home buyers have a lower median income than the white homebuyers. In addition to that, African American home buyers also had a higher tendency to have student loan debt."

Rudy Avila teaches financial literacy with MDW Credit Solutions and says before you begin the process of purchasing a home, know where your credit stands.

"I would take at least, you know, three months of really repairing, you know as much as you can, and improving building as much credit as you can," he said.

Credit scores are major considerations on loan applications and agencies look at three factors when rating your score.

"They want to see that you have a good amount of different accounts, as far as credit cards, secured or unsecured loans, car loans. Multiple accounts will look good if you're in good standing. The next big point would be the credit utilization. They want to see you under 30% a month on your cards report. So if you have a $1,000 limit, they want your card to be reporting at no more than 300. The third biggest factor is going to be your payment history," Avila said.

Avila suggests those who don't have much credit history to consider becoming an authorized user. You'll be able to start using credit and benefit from the primary cardholder's responsible financial behavior.

MDW Credit Solutions is working with Kings County's Welfare-to-Work program offering a financial literacy program and help with credit repair. They hope to bring the program to Tulare and Fresno Counties next.