“Must-Know” First Time Home Buyer Qualifications

Key Takeaways

  • First time home buyer qualifications aren’t as intimidating as they may seem.
  • There are numerous programs available to assist first time home buyers, so make sure you shop around.
  • The best thing you can do to prepare for the qualifications for first time home buyer loan is to research your options.

When it comes to buying your first property you may feel intimidated, and that’s okay. It’s important to note that first time home buyer qualifications aren’t as daunting as they may seem. There are numerous funding options available to first time home buyers, and it’s time you learned what they are. Read on to learn about the resources available to first time home buyers and help move closer to accomplishing your goals of homeownership.

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qualifications for first time home buyer

10 Ways To Qualify As A First Time Home Buyer

A harsh reality about real estate is that the home buying process rarely goes exactly as you plan for it to. Despite this fact, there are ways that you can be prepared going into the process. When it comes to first time home buyer qualifications, a strong understanding of your financial profile and your goals as a homeowner can help you seek out the options to make your first property a reality. Here are just some of my tips for approaching a first time home buyer loan:

  • Request a copy of your credit report: As scary as it may seem, you will need to request a credit report and ensure that everything is correct. You should verify your account information, payment history and more so that when it comes to your credit score, everything is as accurate as possible.

  • Check your credit score: When it comes to getting approved for a mortgage and buying a property, your credit score will be taken into account. Lenders want a record of your financial history, so before you meet with your bank it’s a good idea to have a strong understanding for yourself. Don’t worry if it’s not as high as you think it should be, there are several places you can go from here.

  • Understand what kind of down payment you can afford: As you prepare to buy your first home, you will want to take stock of your finances and determine how large of a down payment you can afford. Remember that there are different down payment requirements for different loans, and that conventional mortgages typically require at least a 20 percent down payment in order to avoid private mortgage insurance.

  • Get pre-approved for a loan: Before you start house hunting, make sure you zone in on your budget. By getting pre approved, you’ll have a better idea of the properties that are within your price range, and you won’t find yourself disappointed or surprised down the line.

  • Learn about your debt-to-income ratio: A debt-to-income ratio simply means the amount of monthly payment obligations you have in comparison to your monthly income. It is important to consider the amount of existing debt you have before adding a mortgage or loan payment on. This will allow you to be better prepared financially for the adjustment of buying a property.

  • Know the types of first-time buyer options out there: If you are concerned about your credit score or debt to income ratio (or even if you aren’t), it is important to research the types of first time home buyer programs that exist to help you. One example is an FHA loan, which is known for assisting with first time home buyer qualifications.

  • Learn which programs apply to you: After researching the various programs in existence, you may have a better idea of what could apply to you. However, it is crucial to check which first time home buyer program qualifications you meet. By looking at all of your options you can help guarantee that you end up with the best loan possible depending on your circumstances.

  • Budget for the expenses of homeownership: As you move through the home buying process you will get a better idea of the type of mortgage you will be able to afford; don’t accept this number at face value. There are a number of expenses that go along with home ownership, and it will greatly benefit you to consider them early on in the process.

  • Hire an experienced real estate agent: If you decide you are ready to start the house hunting process, finding a real estate agent you work well with will make all the difference moving forward. The right realtor will be able to identify listings you may be interested in and even negotiate prices on your behalf down the road. Don’t be afraid to meet with several until you find the right one.

First Time Home Buyer Credit Score

If you are concerned about your credit score as a first time home buyer, understand that you are not alone. More importantly, however, understand that there are a number of options available to you that may not be eliminated based on your credit score. First time home buyer qualifications are often not exclusively determined based on your credit score. You can shop around for different lenders, rates and more.

First time home buyers, and even investors, are often concerned with whether or not they have a “high enough” credit score to qualify for a mortgage. What is important to note, is that first time home buyers can often have a lower credit score when compared to more seasoned investors. This is because as a first time home buyer your financial history does not contain a history of making mortgage payments.

Regardless of your credit score, there are a number of ways to qualify for a mortgage. For example, there are first time homebuyer programs that exist to enable aspiring homeowners to achieve their dreams of owning a property. One of the best pieces of advice I can give you is to not throw in the towel too early. No matter what you may go in thinking about first time home buyer qualifications, there are options available to you.

How To Qualify For First Time Homebuyer Programs

There are several first time homebuyer programs that were put into place to help individuals purchase their first properties, and it’s important to know which can apply to you. Whether you are worried about your credit score, a down payment, or just the process overall, understand that there are programs out there to provide assistance. Some first time home buyer qualifications by state can vary; however, this should serve as a general guide to get you started.

Down Payment Assistance

Coming up with a down payment is one of the biggest hurdles first time home buyers face when moving towards acquiring their first property. The idea of making a large down payment can seem impossible, and so can the idea of coming up with room in your monthly budget for private mortgage insurance. That’s why there are assistance options to help with first time home buyer qualifications.

The U.S. Department of Housing and Urban Development will provide funds and grants to first time home buyers in need of financial assistance. They will additionally provide specific loans that require lower than average, or no down payment at all.

Aside from national programs, there are also statewide options that can vary depending on where you live. For example, if you live in California the GSFA Platinum Program was created to help homebuyers in California purchase a home by providing down payment assistance. Be sure to do some online research regarding the programs specific to your area to ensure you are making the most out of the resources available to you.

FHA Loans

As a first time home buyer, FHA loans are one of the first options you should look into. They offer home buyers lower qualification guidelines which are more flexible when compared to those of a conventional mortgage. For example, FHA loans often have lower down payment requirements so if you qualify for an FHA loan, you may be able to make a down payment as little as 3.5 percent.

FHA loans are provided by the Federal Housing Administration and similar to any funding option, there are some FHA first time home buyer qualifications required in order to move forward. You will need a credit score of 600 and there are some additional requirements when it comes to your debt-to-income ratio.

Fannie Mae Loans

A Fannie Mae loan is yet another option that can assist first time home buyers. This program helps low to moderate income borrowers purchase a home with a down payment of only 3 percent. Fannie Mae loans are offered exclusively to first time home buyers and often require a minimum credit score of 620. Additionally, you may be required to complete a homebuyer education course.

first time home buyer credit

When it comes to buying your first house, the best thing you can do is research your options. The majority of first time buyers will feel intimidated when considering first time home buyer qualifications. The best way to counter those fears is to plan and research your budget and the funding options available to you. Remember, there are a number of options in place that were specifically designed to help you achieve your dreams of home ownership.

Are you in the midst of buying your first property? Let us know in the comments which piece of advice you found most helpful.