Home loans are one way home buyers can get a foot in the door. If you don’t have the money to buy a home in one go, getting a home loan will allow you to start saving and building your credit. However, choosing a mortgage and applying for a home loan is not as simple as it seems. There are a number of factors to consider before you dive into the homebuying process.
What Makes A Person A First-Time Homebuyer?
Hearing the term “first-time homebuyer” can make things sound rather straightforward. Someone buying a home for the first time, right? Actually, there are quite a few ways to define this when it comes to real estate, such as:
- A person who’s only owned property that doesn’t comply with relevant building codes.
- A single person who’s only previously owned a house with a spouse.
- Someone who hasn’t owned a principal residence for more than three years.
- Someone who’s only owned a residence without a permanently fixed foundation.
If you fall under any of those categories mentioned above, then you qualify as a first-time homeowner. What comes immediately after determining this is proving that when you take on a mortgage, you can repay it. The general qualifications are:
- A credit score of 620, at the very least, or higher
- A down payment of 3.5% minimum
- Proof of income spanning at least 24 months (two years)
It should be noted that there are certain special programs out there that don’t require a down payment at all, only need a credit score of 500 at least and afford the ability to buy a house despite having minimal income.
Kinds Of Loans For First-Time Buyers
There are plenty of benefits that come with pre-determining what loan will be ideal for you. Aside from helping you to be more cost-efficient, get better choices in terms of homes available to you and having a payment plan that’s very handy.
Loans available to first-time homebuyers include, but are not limited to:
- Conventional Loans – These mortgages have a fixed rate, further broken down into conforming loans and non-conforming loans. They are neither insured nor guaranteed by the federal government. The requirements are incredibly strict, making them the most challenging ones to qualify for. General requirements include a bigger down payment, potential for private mortgage insurance (PMI), lower debt-to-income ratios and a high credit score. If you are able to qualify for this particular loan, grab the chance! They’re affordable especially in comparison to loans the federal government guarantees.
- FHA (Federal Housing Administration) Loans – The FHA is under the HUD (United States Department of Housing & Urban Development). It’s meant to provide American citizens with various mortgage loans. They’re easier to qualify for than conventional loans and have less stringent needs in terms of credit requirements.
Your Mortgage Experts at America’s Mortgage Solutions!
When it comes to real estate, “first-time homebuyers” means a bit more than just someone buying a home for the first time. A person that qualifies as a first-time homebuyer then has to prove they’re able to repay mortgages. Loans for first-time homebuyers include FHA loans and conventional loans.
Are you an overwhelmed first time home buyer at North Palm Beach? America’s Mortgage Solutions can help! We’re dedicated to ensuring a smooth home purchase or refinance experience as home loan experts in North Palm Beach and all of Florida. Please give us a call at (561) 316-6800 to schedule your consultation.
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