Buying a home is one of the biggest financial decisions you’ll ever make, but for many young professionals and first-time buyers, the process feels overwhelming.
Before I left Minneapolis, Dylan Motto and I sat down with Michael Houg, a seasoned mortgage broker from Plymouth, Minnesota. We’d just finished a round of golf, where Michael shared some sharp insights on home financing between swings.
This conversation wasn’t just about numbers—it was about real strategies young buyers can use to set themselves up for success.
Building a Strong Credit Foundation
Dylan, a 24-year-old professional with two years of work experience, asked Michael, “What should I be doing right now to prepare for homeownership?“
Michael’s response was immediate: Start with credit.
“If you haven’t built credit yet, start now,” he explained. “Any kind of credit that is non-recurring, like credit cards that you pay off in full each month, will give you the highest credit score in the shortest period of time.”
This hit home for Dylan, who realized that while he had a credit card, he wasn’t actively managing it to maximize his credit score.
Michael emphasized that a strong credit score leads to better mortgage terms and lower interest rates, potentially saving buyers thousands over the life of a loan.
Determining Your Price Range
Many first-time buyers struggle with figuring out their budget. Dylan, curious about what a realistic price range would look like, asked Michael, “What are some simple ways to figure out what I can afford?“
Michael broke it down:
- Debt plays a huge role. The less debt you have, the more you can borrow for a home. Lenders consider your debt-to-income (DTI) ratio, which compares your monthly debt payments to your income. Keeping your DTI low means you’ll qualify for better loan options.
- Credit score matters. Two buyers with the same income can qualify for very different loan amounts based on their credit scores. A higher score can open doors to better financing.
- The 28/36 Rule. A general rule of thumb is that no more than 28% of your gross monthly income should go toward your mortgage, and no more than 36% should go toward total debt (including student loans and car payments).
During our golf game, Michael shared a story about a young couple he helped navigate these factors. By paying off a small car loan and optimizing their credit, they qualified for a loan that allowed them to buy a home in a much better neighborhood—without increasing their monthly payment.
Creative Ways to Save for a Down Payment
One of the biggest roadblocks for first-time buyers is saving for a down payment. Dylan asked, “What if I don’t have enough savings? What are my options?”
Michael’s answer was something most people overlook: Borrowing against a 401(k).
“If you have a 401(k) through your employer, you can borrow against it for a down payment,” he explained. “This lets you build retirement savings while also setting aside funds for homeownership. Plus, borrowing against your 401(k) doesn’t carry the penalties of withdrawing early.”
He also pointed out other strategies:
- First-time homebuyer programs that offer lower down payments.
- Gift funds from family members, which many lenders allow if properly documented.
- House hacking—buying a multi-unit property and renting out part of it to offset your mortgage.
Why Work With a Mortgage Broker Instead of a Bank?
Dylan asked, “Why should someone work with a mortgage broker instead of going directly to a bank?“
Michael laid it out simply: Options and savings.
“The biggest advantage of working with a broker is that you’ll get a more competitive interest rate,” he said. “We don’t have the same overhead as big banks, and we work with multiple lenders instead of just one. That means I can shop around to find you the best deal.”
Beyond rates, brokers also offer more flexibility in underwriting, making it easier for buyers with unique financial situations—such as self-employed individuals or those with student loan debt—to qualify for a mortgage.
“When you work with me, you work directly with me,” Michael added. “I’m not passing you off to a call center. If you need a niche loan product, I’ll find it. If you hit a roadblock, I’ll help you work through it.”
Final Thoughts
As we wrapped up the interview, it was clear that Michael Houg isn’t just a mortgage broker—he’s a financial guide for first-time buyers navigating one of the biggest purchases of their lives.
His insights on credit, debt, and financing options make the home-buying process feel more manageable. Whether you’re ready to buy now or just starting to think about it, talking to a mortgage professional early can set you up for success.
On the drive back to the airport, Dylan and I reflected on the trip. Beyond mortgages, we got into a discussion about how financial professionals—whether mortgage brokers, real estate agents, or even therapists—can build trust with potential clients through social media.
If you’re considering buying a home in the next few years, start taking small financial steps today. And if you want an expert in your corner, talking to someone like Michael Houg or David Xie(I had an SEO audit session with him) might be the best move you can make.
