First Time Home Buyer Loan – The Complete Step-by-Step Guide 2019

Buying a home can be scary. Everybody wishes to have a house of their own. A dream home as they call, but it seems home ownership is still a critical situation in this modern and so well developed era.

First Time Home Buyer Loan

Anybody who wishes to own a house faces a number of obstacles in their way to buy a home, that is, not having enough savings for a down payment, poor credit card history, rising home prices, not having a stable job, limited inventory and many more. However, the first time home buyer can go for FHA loan.


What is an FHA loan?

FHA stands for federal housing administration. Basically, FHA is not a loan. It ensures a loan for buying home for the first time home buyers. This program was originated in the 1930s  by the government. This program can be helpful to those people who have a lower credit score or having a lower down payment as low as 3.5%.


How to qualify as a first-time home buyer?

All banks in India have their own eligibility criteria. Here is the list of the requirement that needs to be put into consideration.

  1. The age criteria for applying for a home loan is between 18 and 60
  2. You need to be self-employed with a stable income.
  3. You need to earn a minimum income coated by the banks.

These three criteria would make you eligible for a loan, however, there are other factors that need to be put in mind before applying for a home loan.

  1. Your monthly income: when you apply for a loan to the bank, you need to prove that your monthly income is at least 50% or more in terms to serve the EMIs for the loan you have applied.
  2. Another loan requirement: you need to be sure that you don’t have to pay for another loan, this would decrease the chances for qualifying the loan requirements.
  3. Your down payment capability: you need to pay at least 20% of what the amount you have applied for. The bank will give you only 80% of the amount the rest of the amount will be mobilized by you. However, by applying under the FHA policy you only need to pay the down payment near about 3.5%.
  4. How important is your credit card?

In order to get your loan sanctioned by the bank without any much fuss, your credit card plays one of the important key factors in the mortgage program for paying for the down payment or getting a loan.

  • Get a copy of your credit card

In terms of getting a loan, you need to submit a copy of your credit card along with other important documents that is requested by the bank.

  • See if you qualify for an FHA loan

FHA  loans are the most favorable loans for first time home buyers. As they have less requirement compared to other loan requirements. It is easier for a buyer to easily get a loan under this programme. FHA offers a maximum loan to value ratio of 96.5% that means you just need to pay near about 3.5% down payment.

  • Meet with lenders

Finding a good real state agent is one of the key parts for applying a loan for buying a home. Once your loan is approved, find a good real state agent who can offer suggestions about home inspectors, insurance agent. Etc. they will help you by contacting the listing agent to set up showing and help you negotiate the purchase. A lender or broker will assess your credit score.

They will help you in giving necessary suggestions and answer for your question on how you can improve your credit.

It’s quite difficult being a first time home buyer, as it conducts a lot of procedures and   requirements from the buyer. From credit card score, down payment to finding a good real state agent who can guide you at every process for applying a loan. However, it makes a frustrating situation for buyers.

Fortunately, the government had issued some programs that can help the first time buyers to choose the right program for themselves.

Here are some 6 first-time home buyers program to look before you apply for the home loan

1. FHA LOAN: As we have already discussed that FHA loan ensures the loan you apply for. FHA loan is insured by federal housing administration. It is an ideal loan program for the first time home buyer to increase the credit score for lower credit scorer or little money you have saved for a down payment.

This program is much more flexible than a traditional home loan. The best thing for the first time home buyers is that your down payment for an FHA loan could be a gift from a native or from a friend.

It has some basic requirement like any other program would have accepted, your card score ability, in order to get 3.5% of down payment you credit card score should be 580+.


2. USDA LOAN: This home loan program is for low moderate-income buyers in a rural area of the country. Those who have an average income or less than that can qualify for USDA home loan.


3. VA LOANS: VA stands for veteran administration. The VA loans are the cheapest loan program available because it does not require any mortgage insurance. The  VA requires no down payment making the loan perfect for the first-time home buyer for those who are eligible.


4. GOOD NEIGHBOR NEXT DOOR PROGRAM: It is a HUD created program. HUD stands for human and urban development. This program favors to those who are teachers, firefighters and police officers, medical technicians. If eligible they can buy a home at a half price of the actual value.


Eligibility Criteria For The Good Neighbor Next Door Program

First Time Home Buyer Loan

  • Law enforcement: Those who are working full-time by a local, state law enforcement agency can entertain such a program.
  • Teachers: one who is a full- time teacher at public or private school can apply for such a program.
  • Firefighters: All full-time firefighters are eligible for the program.


  1. HOME READY HOMEPATH MORTGAGE: This program exclusively favors the first-time home buyers and it is mainly targeted to the first-time home buyers. By receiving a buyer education course you can receive closing costs on a mortgage loan near about 3%, a low down payment of just 3% required, that is even less than the FHA program loan.


You also need to have a real state agent who can guide you to purchase a home loan through this program.

  1. NDAL LOAN: The NADL stands for a native American direct loan. It is a type of veteran home loan program. They allow native Americans to purchase eligible property on recognized trust land.


Criteria for eligibility

  1. The buyer must have a valid eligibility certificate from the veteran’s administration.
  2. Credit card score of 640+ is required
  3. Borrowers with stable income
  4. It is for owner occupant only, not for investment properties.


Ask your lender

Above mentioned details is for the first-time home loan buyers. however, it will be more comforting if you get the help of a broker or a real state agent who can help and guide you at every stage of the process.  They will assist you with, which program of first- time home buyer is favorable to the conditions regarding credit card score and down payment.



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