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First Time Home Buyers Loan Info

A first-time home buyer is a person purchasing their first home with a loan or someone that has not held ownership in a home over the past three years, according to the Federal Housing Administration guidelines. Anyone who is looking for a first time home buyer loan will need to understand what their options are for obtaining a loan as well as ways to reduce their overall costs and risks.

How to Buy Your First Home

Learn how to buy your first home by taking the time to learn about the options. It is important for buyers to have a solid understanding of what options are available to their specific needs. Help for first time home buyers is generally available from a variety of sources including lenders, financial planners, and third parties.

Most importantly, individuals need to determine if they qualify to borrow money to buy a home. Those with a down payment and a steady income may wish to take into consideration all of the loan options available to them. Here’s where to start.

How Much of a Loan Can You Afford?

Every first-time home buyer must make this the place they start. That is, it is important to determine how much of a loan and monthly payment the individual can affordable comfortably each month. The worst outcome is for an individual to get into a loan they cannot afford and face foreclosure. To determine this, buyers should consider all costs related to homeownership as well as their income before obtaining a first home mortgage. Here are common costs to keep in mind:

  • Most loans, including a first time home buyer loan, will require a debt to income ratio under 50 percent. That means the amount of debt the borrower has each month should not be more than half of their income.
  • Home insurance costs are necessary for all home mortgage borrowers.
  • Consider real estate taxes.
  • Talk to other homeowners in the area. Determine how much they pay in utilities.

This, along with any other expenses the borrower has, determines how much he or she can borrow based on their income. Lenders will work closely with borrowers to determine these factors as well.

First Time Home Buyer Qualifications Set by Lenders

When obtaining a first time home buyer loan, individuals will need to discuss their needs and their qualifications for borrowing at length. The goal here is to understand what the first time home buyer qualifications are for that particular loan. Lenders set these rules, as do some loan programs that are available to help support borrowers. Lenders will gather information and then offer several loan options. Borrowers need to be able to choose the loan that fits their needs.

Keep in mind that most first time home buyers will need to have:

  • Some history with credit, usually at least two credit accounts
  • Credit scores are often at 580 or higher for low-risk loans such as FHA loans
  • Steady income is necessary for every situation (though there is no limit threshold in most cases)
  • No judgments or serious delinquencies

Again, it is critical to understand that every situation is different. Lenders set their own rules for the type of first time home buyer qualifications they require. But, buyers need to know they have options.

Buying Your First Home

When buying your first home, consider your loan carefully. First time home buyer incentives, discount loan offers, and easier qualification options are available and can make borrowing money easier to do. Here is a look at some of the most important factors.

What First Time Home Buyer Incentives Are Available from Lenders?

When obtaining a first-time home buyer loan, borrowers need to ask about incentives. These are generally discounts available to reduce the overall cost.

First Time Home Buyers Program

First-time buyers program options are available from most lenders. This simply means they will work with the borrower to determine the best possible type of loan for their needs. These programs differ from one state to the next. Most first-time home buyers program loan offers to provide individuals with low to moderate income with easier lending requirements. Borrowers can work with lenders as well as their state and local representatives to discuss the availability of incentives and discounts such as:

  • Down payment assistance programs
  • Loans specifically designed for a first-time home buyer that is a veteran, police officer, health care worker, or firefighter
  • Mortgage tax credit programs which can help to reduce costs through state incentives.

First-time buyers program options differ for each state, but most lenders will know about these offers. They want to help borrowers qualify.

Options in a First Home Mortgage

For a first-time home buyer mortgage, consumers should turn to the federal government’s numerous options. These are discounted programs available because the federal government provides the lender with an insurance or guarantee for the program.

FHA and VA Loans

FHA and VA loans are the most common first-time home buyer mortgage options available.

FHA loans allow first time home buyers to obtain a loan with lower down payment requirements, lower credit scores, and more flexibility in other qualifications. In return, borrowers get a lower interest rate.

VA loans are those meant for individuals who served in the Armed Forces either retired or active duty. These loans do not require a down payment, have lower interest rates, and require less overall qualifications.

Other First Home Mortgage Options

First time home buyer mortgage options extend beyond these two options. Here are additional examples:

  • Options exist for those purchasing a manufactured housing or mobile home.
  • Loans exist for those purchasing in rural areas and farmland.
  • Choose loans for remodeling and renovations as well.

For those buying your first home, it pays to look into all loan options available and to compare them carefully. First-time home buyer options range widely to meet the needs of most consumers.

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