First time home buyer, mobile view banner, March 2023 blog, Travis CU,

First-Time Homebuyer Requirements and Steps to Purchasing Your First Home

Homeownership may seem to be an impossible dream given today’s current market conditions. Even with high interest rates and low housing inventories it’s still attainable, especially for first-time homebuyers. There are steps you can take to ensure you’ll get the best home-buying experience possible. This includes looking for First-Time Homebuyer Programs that can help you become a homeowner.

Start with a Financial Snapshot

Buying a home for the first time requires taking an honest and sometimes sobering look at your financial picture. Things such as how much savings you have available for the purchase, your credit score and your total outstanding debt all play a part in qualifying for a mortgage.

  • Available Savings: Purchasing a home is expensive. Homebuyers typically pay for unanticipated fees including closing costs, home inspections, HVAC inspections and many other things. They also provide a down payment for the purchase. Ideally, saving for a home should start several years before you intend to buy. No matter your timetable, start by opening a savings account dedicated to homebuying costs and start saving.
  • Know Your Credit Score: Long before you apply for a mortgage, check your credit report and your credit score. These let lenders know how much of a risk it will be to lend you money to buy a home. The higher the credit score, the lower the risk and the better the interest rate that will be offered to you.
    Check your credit early so you have time to fix any issues before you apply for a mortgage. Reviewing your credit report allows you to identify what debt can be eliminated to improve your debt-to-income ratio (monthly credit obligations divided by monthly income), a key factor for lenders. Also, reviewing your credit allows you to dispute any accounts that you did not open.

Find First-Time Homebuyer Programs

Lenders realize borrowers may be buying a home for the first time and have created programs just for them. Some First-Time Homebuyer Programs may help you with down payment options if you can’t meet the requirements. Others may provide assistance if you have a lower credit score than is needed for a mortgage.

The standard down payment for a home purchase is 20% of the purchase price. This can be a substantial amount with today’s home prices. Programs that offer down payment assistance typically provide borrowers a grant or a low-interest loan to help meet the down payment requirements.

Down payment loan programs may require the loan to be held as a second mortgage or be a deferred loan that is paid back when you sell the home. Others may allow loans to be forgivable once you remain in the home for a certain period of time. There are loan products that allow for a lower down payment but they will require borrowers to pay Private Mortgage Insurance (PMI) with the mortgage.

The key is to search for the First-Time Homebuyer Program that fits your particular needs. You can start by connecting with a Travis Credit Union Mortgage Specialist on our mortgage hub.

Choose the Right Lender

Once you’ve saved enough and know your credit score, you are ready to find a lender that can make your home-buying journey easy. Mortgage lenders are not all the same. Be sure to check mortgage products, compare interest rates, loan terms and fees. Consider lenders who allow you to get pre-qualified, which will let you know how much of a home you can buy before you actually apply.

Start Your Journey at Travis

Travis Credit Union is a great place to start your home-buying journey because we’re focused on your financial wellness. Our knowledgeable and friendly mortgage loan consultants will walk you through the entire process and keep you informed every step of the way. We can also help you with other lending products such as vehicle loans and credit cards.

And we’re a great place to start saving for your home purchase. Open a Certificate or Money Market Account and start earning more with your money.

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