6 First Time Home Buyer Qualifications [Detailed Checklist]

Buying your initial house is a giant milestone, but you’re going to have to jump through a few hoops in order to qualify for financing. Luckily, we’ve a place along an inventory of initial time purchaser qualifications, therefore, you’ll higher assess your position and choose if the time is correct for you to get into your first home.

first time home buyer qualifications

Many of today’s home buyers rely on mortgage assistance programs to buy a home. There area unit quite two,500 grants and loans programs nationally, with at least two active programs in each state, according to a recent report by the Urban Institute.

The bulk of those help programs, however, are geared toward first-time home buyers. But the term “first-time home buyer” is often dishonest in relevancy a majority of those programs. The result is that people who are qualified to apply mistakenly pass up the opportunity for assistance.

Making sure you have got all the documents ready before you apply for a loan ought to scale back anxiety and contour the method. The additional info you have got regarding credit, debt and financial gain to share with the loaner, the higher his assessment are going to be regarding your loan choices.

First Time Home Buyer Qualifications: How to Qualify?

So, what are First Time Home Buyer Qualifications? Read along to find more.

1. Mortgage requirements for first-time

Mortgage qualifications and requirements are the same for first-time and repeat home buyers. There is no distinction from the perspective of mortgage loan eligibility. But before applying for a mortgage one must make the process flow much smoother for them by organizing all the financial documents and other paperwork that lenders require with the loan application.

One must have a signed purchase agreement with their seller, pay stubs for the last 30 days, bank statements for the last 60 days, tax returns for the last 2 years, proof of homeowners insurance, documented dividends, stock earnings and other source of income, proof of bonus income and pension statements if applicable.

2. Previous Home Ownership

One of the FHA’s primary criteria is whether or not one owned a house previously. If one has never owned a house they are considered a first-time buyer. Even if they have owned a house previously they can still qualify as a first-time home buyer.

According to the FHA one can do so if they have not been an owner in a primary residence for at least three years. In case a couple is separated and either of the spouses has owned a house yet they together can own a house as the first-time home buyer.

3. Effect of divorce

If a person is divorced or is displaced from their spouse then they could be first-time home buyers. But their primary residence should not be anything other than the house owned with ex-spouse and should be a parent.

4. Non-Home ownership

The FHA allows one to be considered as a first-time home buyer even if they have owned a house within three years of the purchase or if the residence has not been permanently attached to a foundation.

5. Property Damage

If one has owned just a piece of property and it has sustained damage then one can qualify as first-time home buyer fewer than two conditions. If the damaged property does not measure up to local and state building codes and if the cost to fix the property is more than the cost to build a new property.

6. Other Program Eligibility Requirements

FHA is not specifically for first-time home buyers but it works in conjunction with other programs that are reserved for the first-time buyers. Lenders have their own eligibility requirements such as income and credit score requirements in addition to the stipulation that they are first time home buyers.

What are the requirements for first-time home buyers?


1. Down Payment requirements

If one is going to use a conventional home loan to buy a house then they will have to make a down payment of at least 3% of the purchase price. Fannie Mae and Freddie Mac the two government-sponsored corporations buy home loans from lenders and will buy mortgage loans up to 97% of the home value. Which means the lowest down payment requirement for the first-time home buyer using a conventional loan is 3% in many cases.

FHA home loans allow eligible borrowers to make a down payment as low as 3.5% of the purchase price or appraised value. First-time buyers must have a credit score of 580 or higher to qualify for this down payment option.

VA loans offer 100% financing, which means there is no down payment requirement for the first-time home buyer who uses VA, guaranteed mortgage loan. That is a huge benefit for the ones who are eligible for this program.

2. Credit Score Requirements

Credit scores are another important mortgage requirement for first-time home buyers. These three-digit numbers give lenders some insight into how much money was borrowed and repaid in the past. Credit scores are based on information contained within a person’s credit report history, which includes such things as car loans, credit cards and other forms of borrowing activity.

There is some leeway when it comes to credit score requirements for the first-time home buyers. For a conventional loan, mortgage lenders prefer to see a score of 600 or higher.  While some lenders might need a slightly higher score, others will go lower, but 600 are a pretty good indicator.

3. Debt-to-income ratios

Debt ratios are another important mortgage loan requirement for the first-time home buyer. This is an area where they have seen a bit of easing over the last couple of years. Lender today is allowing higher debt levels than they were two or three years ago.

Fannie Mae announced it was increasing its debt ratio limit for the loans it can purchase. They raised the debt-to-income limit from 45% to 50%. Which means that a home buyer could have combined debts totaling 50% of their monthly income. These changes will be particularly helpful for the first-time home buyers who have significant debts already from car loans, student loans etc.

who qualifies as a first time home buyer

A checklist of the qualifications required

1. A copy of credit reports

The first thing one needs is to get a copy of their credit report from all three major credit bureaus. The three reports are credit karma, credit sesame and wallet hub. Once all the three reports are prepared, it should not have errors. Errors to check are incorrect employers, current and previous phone numbers and address, inaccurate account information, accounts that do not belong to the person, late payments that should not be included and credit injuries that one did not authorize.

2. Check credit scores

Credit score is one of the most important factors when it comes to getting approved for a mortgage so it is important to make the credit score as high as possible.

3. Getting pre-approved before house hunting

Getting pre-approved for a mortgage is important before one starts house hunting. To get pre-approved one must speak to the lender regarding it. A loan officer will check the credit and verify the income and assets with tax returns, paycheck statements and bank statements. Most realtors will not show houses unless one has an approved letter in hand.

4. See whether one qualifies for FHA loan

FHA loans are the best for first-time buyers because they have fewer strict requirements making one easy to qualify. An FHA mortgage has a maximum loan-to-value ratio of 96.5%, which means a down payment of 3.5%.

5. Knowing the down payment options

The amount of down payment needed to buy a house depends on the type of mortgage one gets. First-time home buyers have less money savings, which is why low, and no down payment home loans are in demand. FHA loans require 3.5% of the purchase price as a down payment making them an attractive option for first-time buyers.

6. Hiring an experienced real estate agent

Some first-time buyers believe that they can save money without hiring a realtor. An experienced realtor will not only help through the buying process but will negotiate on one’s behalf and for best interest.

Before planning to purchase a house it is important to look at all the factors. Even if one factor is ignored, there can be problems.

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