Getting a mortgage for the first time may feel like a daunting task. For first-time homebuyers, you may be wondering what you need to know about getting your first mortgage. If you’ve never purchased a home or haven’t owned one for at least three years, you are considered a first-time homebuyer, and there are special programs and exceptions when it comes to you purchasing a home.
Fortunately, working with the right mortgage broker can make the process a lot easier for you. First Fidelis is here for you for your first-time home mortgage needs. We offer many different types of loans, even to individuals with lower credit scores. If this is the first mortgage you’ve applied for, then there are some key things you should know.
What to Consider
Many people underestimate the money they may have to pay upfront when buying a home. If you’re planning on buying a house, you’ll want to start saving money early. You should consider the cost of the down payment, closing costs, and move-in expenses so you’re prepared and can afford the home you want.
You should also put money away in case an emergency happens. We recommend having enough money in your savings account to cover at least three to six months of living expenses.
It’s also important to maintain good credit. Your credit score determines whether you qualify for a mortgage or not, as well as affects first-time home loan interest rates. To maintain good credit, pay all your bills on time, keep credit card balances low, and track your score over time.
Finally, consider your monthly expenses and how much you can afford. It’s a good idea to create a budget and stick to it so you can monitor and keep track of your spending.
First-Time Homebuyer Loan Options
Fortunately, there are many different loan options for first-time homebuyers. At First Fidelis, there are a few different routes our customers can take.
- FHA Loan: These types of loans are insured by the Federal Housing Association, so they often have a smaller down payment. If you have a lower credit score, you may still qualify for an FHA loan but with a higher down payment. For families who may not have enough money saved to pay for a large down payment, this is a great option.
- VA Loan: VA mortgages are guaranteed by the U.S. Department of Veterans Affairs, and they offer lower interest rates and often don’t even require a down payment. If you are an active-duty U.S. service member, a veteran, National Guard member, U.S. Reserve member, or a spouse of a veteran, these types of loans are available to you.
- 203(k) Home Loan: The 203(k) loan program is available to first-time homebuyers, especially those who plan to renovate the home they’re moving into. Generally, it’s easier to qualify for this loan program with a higher credit score and more money in your savings.
First Time Homebuyer Assistance Programs
If you’re still worried about the cost of getting your first mortgage, there are some assistance programs available to you. These programs are typically government or charitable-sponsored and can help with your down payment and closing costs.
- Down Payment Assistance (DPA): Though many homebuyers assume they must put 20 percent down initially, most lenders will offer loans with a much lower down payment percentage. Some down payment requirements may only be three to five percent, saving you money short-term. You can also receive DPA assistance with certain loans, including deferred payment loans, forgiven loans, and second mortgages.
- DPA Grants: You may be able to receive grant assistance through local or state government programs. These are the best options for first-time homebuyers since they don’t have to be repaid.
- Closing Cost Assistance: You can receive help with closing costs through government-sponsored or private programs. This assistance also either comes in the form of a grant or loan. When buying a house, you can also negotiate with the seller to reduce the cost of closing or property taxes.
- Federal Assistance Programs: There are multiple programs offered through the federal government to help homebuyers afford their first home. Many government-backed loans, including FHA, USDA, and VA loans, have lower interest rates, and you can even qualify for them with a low credit score.
- Good Neighbor Next Door: This program is sponsored by the Department of Housing and Urban Development and is available for teachers, law enforcement, and firefighters. Certain foreclosed properties may be purchased at a discounted price.
- HomePath Ready Buyer Program: Similar to the Good Neighbor Next Door program, this program is offered through Fannie Mae allows buyers to purchase foreclosed homes for a more affordable price.
- Nonprofit Assistance: For qualifying low-income families, nongovernment organizations may offer financial resources to help you buy a home. Some of these programs include Habitat for Humanity, an organization where volunteers build homes for those in need, and the Neighborhood Assistance Corporation of America (NACA), which offers mortgage counseling and education. The NACA will also help families find a lender that’s willing to work with them.
- Employer-Sponsored Programs: Some employers may offer their employees assistance with down payments and closing costs. These programs typically come in the form of loans and must be paid back over time. Your HR representative or manager can provide more information.
Talk with Your Mortgage Broker
As your trusted Kansas City mortgage company, First Fidelis can make the loan process less stressful for you. If you’re a first-time home buyer looking for a mortgage, we can provide guidance to make sure that you qualify for the home you want. Contact us today at 913-205-9978 for more information or get started with our pre-approval application.