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First Time Home Buyer

A first time home buyer has special considerations when applying for a mortgage loan.  Since the borrower does not have a mortgage history other factors have to be considered in order to qualify for the loan.  Several items will be reviewed during the loan process such as employment, credit, available funds, previous rent history, and the length of time the borrower has been on their job as well as within the industry that they work.

In order to qualify for a first home it is very important to provide all information to the loan officer.  The loan officer is working for you to represent you as a responsible borrower that will fulfill their obligations to repay the loan.  In order to represent you in the best possible manner the loan officer will need your full cooperation in providing several types of documents.

Programs available for First Time Home Buyers:.

Conventional Loans
Conventional loans are offered by mortgage bankers through the oversight of Fannie Mae and Freddie Mac guidelines. At this time, a person that wishes to purchase a home with a conventional mortgage will need to pay a minimum of 10% of the purchase price as a down payment. Anyone that pays less than 20% down payment will also pay monthly PMI.

FHA Loans
The Federal Housing Authority (FHA) offers loans through mortgage bankers and banks.  In order to purchase a home the FHA requires a minimum down payment of 3% of the purchase price.  The monthly PMI is a fixed 2.5% of the loan amount.  Money used for the down payment can be a gift from relatives or friends.  The maximum FHA loan amount is varies by state to state.

VA Loans
The Veterans Administration (VA) offers loans through mortgage bankers and banks.  The VA loan is offered to people that formerly served in the military, active military and former National Guard or National Reserve members.  The VA loans do not require a down payment to qualifying borrowers.  A funding fee is charged for a VA loan but it may be added to the total loan amount.

USDA Rural Housing Loans
The United States Department of Agriculture (USDA) offers loans to purchase homes in rural areas.  Mortgage bankers have access to the USDA zoning maps that identify which areas qualify for their home loans.  Borrowers may borrow up to 100% of the appraised value of the home if the purchase price is higher.  Furthermore, closing costs and the USDA funding fee may be included to the loan amount if the appraised value is high enough to cover the addition of these costs.

Jumbo Loans
The term Jumbo refers to a mortgage that is greater than the current Fannie Mae or Freddie Mac maximum loan amounts.  A person that wishes to purchase a home in this price range will be asked for a 20% down payment.  Rates for jumbo mortgage loans are usually slightly higher than conventional interest rates.


Additional Resources
FHA Loan Limits
FHA Mortgage Insurance
Conventional Loan Limits
USDA Guarantee Fee
USDA Income Limits
USDA Ineligible Areas
VA Loans Limits
VA Funding Fee

Related Blog Posts:
  • Why FHA Home Loans Are Great for First Time Home Buyers
    First time home buyers are often faced with lots of information and decisions. Where to live, what type of home, how big of a home, new versus old are all things that can take considerable time to decide. One choice that is easy is the type of loan to us for the first home purchase: the FHA loan. Here are some of the reasons why the FHA loan works so well.