First-Time Home Buyer Loans & How to Qualify

First-time home buyer loans are a hot topic. Buying a home for the first time can be both exciting and intimidating. You're excited to start building your legacy, but you want it to be the best investment you've ever made. What should you do? Where do you even begin?

For many people, the step up to homeownership can be intimidating. It's not just about finding an affordable house and paying for it in cash. There are a lot of steps that come before buying your first home. 

One of the most important is figuring out how you'll pay for it! Interest rates on mortgages have been at historic lows for some time now, but they're still higher than what you'll find with other types of loans (like student loans or car loans).

There are a lot of first-time home buyer loans for those looking to buy a house. However, it's important to know what you're getting into before taking out these types of loans. Buying a home is a huge decision and one that will likely affect your financial situation for years to come. 

A first-time buyer loan may be right for you if you're purchasing an owner-occupied single-family or duplex, condominium townhome, or cooperative residence - but not if you plan on renting out the property after purchase. 

Requirements for First-Time Home Buyer Loans

Requirements for first-time homebuyer loans are changing, and it is important to understand what steps you need to take before applying. For instance, if you have a cosigner that has not had a mortgage in the last two years, they will be required to get their credit report. In addition, the requirements depend on your income level and whether or not you're married. If you're looking into getting a loan for the first time, get ready with the following:


When you are buying your first house, it is important to understand the importance of a good credit score. Lenders want to know that you have enough money in the bank and can afford your mortgage payments before they approve a loan for you. If you don't have a good credit score, then this may prevent you from getting approved for a home loan. 

A credit score is a number that reflects how financially responsible you are. A good credit score can help you get a lower interest rate on your mortgage, better insurance rates, and even qualify for jobs with high salaries. So what does it mean to have a bad credit score? 

If you don't have enough of these points, then buying your first home might be out of the question because most lenders require at least 640 points before they'll consider giving someone a loan.

Different types of loans have different requirements. In addition, there are many different ways to get your score up, but it can be challenging to know where to start if you're unsure how your credit score works or what that number means. 

When it comes to your credit score, five things will determine if your credit score will be good or bad: payment history, debt load, length of credit history, types of accounts, and new inquiries into your account. If any one of these factors falls below an average level, then chances are- this will affect their total number, which is called "creditworthiness." 


The biggest mistake people make when purchasing a home for the first time is not understanding the employment situation. If you are planning on buying a home, it will be more important than ever to know your job security and if there's any chance that you might lose your job before or after closing.

You should have been with your present employer for at least two years if you plan to buy a home for the first time. You'll be alright if you've changed employment in the last two years but stayed in the same field. However, if you've worked for various companies in different sectors, you're likely to run into problems. Self-employed applicants will be required to show two years of tax returns. Creditors will evaluate your loan applications based on your typical yearly income.

Debt-to-Income Ratio

When buying a house for the first time, it's important to know about your debt-to-income ratio. This is calculated by dividing your monthly income by your total monthly debts. The higher this number is, the less likely you will be able to buy a house because lenders want people who have enough money left over after paying their bills and other expenses each month in order to make mortgage payments on time every month.

For example, if you buy a $200k home with 20% down ($40k) and get a mortgage at 3.5%, that means monthly payments are about $1,650. If you also have credit card debt at 15% and student loan debt at 4%, then your total monthly expenses would be close to or more than double that amount!

Types of First-Time Home Buyer Loans

Emphasize the point that down payment can vary based on loan option with statistics of first-time home buyers loan down payment
Be an Educated First-Time Homebuyer

Conventional Loans

A conventional loan is a type of mortgage that most people are familiar with. It's the kind of loan you get when you put 20% down on your home and make monthly payments for 30 years. The interest rate may be fixed or adjustable, but in any case, it will include some form of penalty for paying off the loan early. So what do these loans have to offer? Read on to find out!

Conventional loans are typically more expensive than other types of financing because they require you to pay for mortgage insurance premiums each month. 

However, if your credit score is good enough, then it can be cheaper in the long run because of lower interest rates and fewer fees.  One disadvantage to consider is that if you want out of your home before 20 years are up, there may be penalties associated with paying off your home early.

Federal Housing Administration (FHA) Loans

The Federal Housing Administration (FHA) is a U.S. agency that insures mortgages for borrowers and lenders on single-family homes, condominiums, cooperative apartments, manufactured homes, as well as some multi-unit properties like duplexes. It helps to ensure homeownership opportunities by providing easy access to mortgage credit through FHA's competitively priced insurance programs with low down payment options and flexible credit requirements. 

FHA loans are a great option for first-time homebuyers. They have lower down payment requirements and allow you to purchase a home with as little as a 3% down payment. FHA loans also offer generous mortgage insurance premiums, which can be paid monthly or in one lump sum at closing depending on the borrower's choice and can even include coverage for your homeowners' association dues.

The Federal Housing Administration (FHA) insures the loans, which reduce the risk for lenders, thus lowering interest rates and helping to make it easier for people who would not otherwise be able to purchase homes due to lower credit scores or lack of savings.

VA Loans

Getting a VA home loan is an excellent option for Veterans, Active Duty Servicemembers, and their families. It's a government-backed mortgage with no down payment and low-interest rates. Plus, you can't be turned down because of credit history issues like bankruptcy or foreclosure etc. 

It was created so that veterans would have access to mortgages with low down payments and competitive interest rates. More recently, the US Department of Veterans Affairs (VA) updated its eligibility guidelines, including Active Duty members who are on orders of no more than 90-days duration.  This means that if you're an active duty member or discharged veteran within three years of discharge, you can be eligible for a VA mortgage with as little as a 1% down payment! 

The VA home loans are designed to help veterans who may not qualify for a conventional mortgage, and they offer some of the most competitive rates on mortgages. There is no down payment requirement with these loans, but there is an upfront funding fee per loan that can be as high as 3.3%. The VA will also charge you 1% or more in interest rates than other types of mortgages.

203k Loans

203k loans are a type of home loan that is used to purchase and renovate homes. They are typically used to upgrade the kitchen, bathrooms, or other necessary areas in the home.  

This loan can also be used to purchase land to build a new house on it. There are many benefits associated with 203k loans, such as low interest rates and no down payment required. However, some drawbacks include not being able to get your money back if you don't use all of it for what you originally intended, having taxes deducted from your monthly payments, and potentially needing an appraisal to qualify. 

There are limits to how much you can write off, and some restrictions may apply depending on what state you live in.  Suppose financing isn't available through conventional sources. In that case, it's possible to get 203K financing with an FHA mortgage and other government-backed programs like VA loans that offer lower rates but have higher down payment requirements (typically 20%).  


First-time home buyers have a lot of decisions to make when it comes to purchasing a new home. One of the most important things they need to think about is financing. There are many different types of loans that can be used for this, but all borrowers should consider whether they qualify for government assistance with their purchase price and monthly payments.

Buying a house can be difficult and time-consuming, but it's 10x easier with loan information. Plus, remember that buying a home is an important decision, so you should get nothing but the best!

If you want the best you can call home, check out our online marketplace.

Our Loan Officers help you as a first-time homebuyer make the decisions that best suite your financial status. If you're looking to start your homeownership journey, check us out.

We verify all the agents on our platform, and you don't have to pay us a dime to sign up!