Let's start with the discussion on DTI, or debt-to-income ratio. Surprisingly, many people overlook the fact that this single number can be just as crucial as the amount of the down payment in determining mortgage approval.

According to the Consumer Financial Protection Bureau, a backend DTI of 43 percent or lower is recommended, and typical loans are usually determined between 36 and 45 percent. The ideal frontend DTI, which considers only housing costs, is 28 percent or lower.

Let's compare two households in Sacramento. Based on Zillow, the average home value in Sacramento is $482,968. One household had existing credit card debt and car payments, resulting in a DTI of 44 percent, while the other household had paid off that debt, lowering their DTI to 35 percent.

Even with the same income and down payment percentage, the household with the lower DTI had a much easier time getting approved. The household with the higher DTI only got their loan approved after reducing their debt for several months prior to applying.

Looking at Sacramento's standards based on down payment percentages, an FHA loan with a 3.5 percent down payment requires about $16,904, while a credit score between 500 and 579 requires 10 percent, or about $48,297. A 20 percent down payment would be approximately $96,594, allowing for a start without PMI.

Credit scores are just as important as DTI. According to themortgagereports.com's July 2026 data, a score above 780 has an interest rate of 6.59 percent, scores in the 760s are at 6.66 percent, 740s at 6.75 percent, and 700s at 6.91 percent. The lower the down payment, the larger the loan principal, so it's beneficial to keep the credit score as low as possible to secure the best interest rate.

Ways to increase approval rates are clearly demonstrated in the cases of the two households. Lowering DTI by paying off existing debt, obtaining pre-approval to set a budget, and reliably documenting income with pay stubs and tax returns are key steps.

Before closing, it's advisable to avoid opening new credit cards, buying a car on installment, or changing jobs. Keeping a separate reserve for closing costs can also make the review process smoother.

When looking at taxes, the average effective property tax rate in California is around 0.71 percent. Based on Sacramento's home value, this translates to about $3,429 annually in property taxes, though this can vary depending on the county and assessment timing.

In Sacramento County, the CalHFA MyHome Assistance Program is also available. It offers first-time homebuyers up to 3.5 percent of the home price as a deferred second loan, which is repaid upon sale or refinancing. Income limits vary by county, so it's important to check directly before applying.

There are several school districts in Sacramento that Korean families pay close attention to. In neighborhoods with higher school ratings, home prices and property tax burdens tend to increase, so both households considered school districts and budgets when choosing their neighborhoods. School district boundaries change frequently, so it's advisable to verify the assigned school for a specific address before signing a contract.

If moving from another state, it's worth noting that California property taxes are assessed based on the purchase price under Prop 13, with subsequent increases limited. This can be confusing if the previous residence was assessed annually. Both households only began seriously looking at properties after obtaining pre-approval.

Focusing solely on the down payment while neglecting DTI can lead to being stuck at the approval threshold. Managing both numbers together seems to be a more realistic approach for families preparing to buy a home in Sacramento. This article is not investment or legal advice, and it is recommended to consult a professional before making any actual contracts.