How to Buy Your First Home

Buying a home…in this economy? Absolutely! You just have to have the right resources and support at your disposal to help you get through the threshold of your first home. From first-time homebuyer programs to how to get a home loan to understanding your credit score, there’s a lot that goes into buying your first home. But, it’s a lot more simple than it sounds.

What do you need to buy a house?

Planning your homebuying journey is just as important as actually getting a mortgage to finance your home, plus you can set yourself up for a better house hunting experience when you know your budget. Using a free home affordability calculator can help you understand how much home you can afford.

Part of planning to buy a home includes making sure you have what you need to get financing. Here is what you need to buy a house:

Know your credit score—Your credit score is one of the main factors lenders consider when reviewing your mortgage application and will determine what loan(s) you qualify for as well as your interest rate. That said, you may be surprised to learn that PrimeLending’s loan options with flexible credit requirements could help you secure financing, even if other lenders have said “no” before. Jump to the credit score section of this blog for more details.

Proof of income—Another contributing factor in your loan application is proving your income. There aren’t specific income requirements, however, your lender will need to see your employment history, financial history, monthly income, and any existing debts you may have. Income doesn’t just mean the money coming in from your employer; other forms of income may include: child support, alimony, Social Security, disability, pension, and distribution income.

Get approved¹ for a mortgage—When you get approved for a mortgage at the beginning of your homebuying process, you can maximize your house hunting by shopping for homes you know you can afford (and avoid the heartbreak of falling in love with a home that’s out of your budget). Plus, you can get more negotiating power at the bargaining table by proving to sellers your offer is backed by a mortgage approval.

Budget for down payment and fees—Buying a home is more than just budgeting for a mortgage; you’ll also need to plan for a down payment and closing costs. What you can put down will have an impact on the types of loans you qualify for and how much you’ll pay each month. That’s where a PrimeLending home loan expert can help. They can give you guidance and run several scenarios to make sure you’re getting the most benefit from your cash on hand to put down. You’ll also need to account for closing costs, which can run between 2–6% of the home’s purchase price. Let’s be honest, the down payment and closing costs combined are a big chunk of change that can seem impossible to save for. You still have more options by considering low and no down payment mortgages.

How to get a home loan

Getting a home loan all starts with an application to help determine what type of loan is best for your home, and financial, goals. Here’s how to get a home loan in four steps:

1. Apply and gather financials. Start by uploading your necessary documents and securely connecting your financial accounts to your application. This is the step where your credit is pulled, your documents are verified, loan options are compared, and you can get a loan estimate.
2. Appraise and verify the property. Before you can get a home loan, the property you want to purchase must be appraised by a professional. The home will also need a professional inspection to ensure the safety of the home and a title search will be conducted to make sure there are not any existing liens on the property.
3. Process and underwrite loan. Once the home you want to buy has been appraised, your financial information will be reviewed by an underwriting team who will determine the loan approval, lock a rate, order title insurance, and schedule your closing day. This is a great opportunity to ask your loan officer any remaining questions you may have.
4. Closing on your loan. Your closing documents will be emailed to you a few day before closing day to give you time to review them. This is when you will get your closing disclosure, pay for closing costs, and order title insurance.

PrimeLending makes the mortgage application process so simple that when your friends ask how you got a home loan you can say, “What, like it’s hard?” Through our Apply Now digital application, you can use your smartphone, computer, or tablet to apply for your home loan whether you’re on the go or from the comfort of your couch. Plus, you can use our Home Loan Tracker to follow your loan’s progress.

What is a good credit score to buy a house

You’ve heard of “credit score” (a.k.a. FICO^® Score), but do you actually know what it is? Your credit score is a breakdown of all of your credit files which tells a lender how credit-worthy you are. While there isn’t technically a “good” credit score to buy a house, most credit scores fall somewhere between the range of 300–850.

The more you understand your credit score, the better off you are. A credit score is calculated using your payment history, amounts owed, length of credit history, new credit inquiries, and types of credit. If you are concerned about your credit score, there are ways to give it a boost, like setting up payment reminders so you always pay on time and reducing as much debt as possible.

First-time homebuyer programs

There are plenty of mortgage options available to homebuyers today, but some are more popular than others for people looking to buy their first home. The most common first-time homebuyer programs are typically government-backed loans. These include:

• FHA Loan—Backed by the Federal Housing Administration (FHA), this loan can help low- to moderate-income borrowers finance their home purchase. An FHA loan also offers first-time homebuyers benefits like down payments as low as 3.5%, lower credit requirements, and low closing costs.
• USDA Loan—The U.S. Department of Agriculture (USDA) backs this which is designed as a mortgage alternative for rural property buyers with limited financing options. As a location-based loan, a USDA loan is a viable mortgage solution for first-time homebuyers in rural and suburban areas. It offers benefits like no down payment requirements, lower interest rates, and affordable mortgage insurance.
• VA Loan—Veterans, active-duty military members, and qualified spouses can all benefit from a VA loan partially guaranteed by the U.S. Department of Veterans Affairs (VA). Borrowers can get VA-exclusive benefits like no private mortgage insurance, no down payment², limited closing costs, and higher loan values.

What is down payment assistance³

Making a down payment can be one of the biggest hurdles to overcome for many first-time homebuyers. Down payment assistance programs can help first-time homebuyers alleviate the pressure of having to save for a down payment by providing up to 5% of the original loan amount. Many down payment assistance programs can also help first-time homebuyers pay for closing costs.

Having the right lender by your side can make or break how you feel about your mortgage process. At PrimeLending, we make home loans simple and support your every step of the way. Contact your local loan expert today to get started.

¹All loans subject to final credit approval and acceptable property. Conditions and restrictions may apply.

²Down payment waiver is based on VA eligibility.

³Certain restrictions apply, subject to down payment assistance program guidelines. Not available in all areas. Please contact your PrimeLending loan officer for more details.