24/7 Hotline: 1-855-643-7500

Your Path to Buying a House Starts Here

Starting your journey on the path to being a first time home buyer can be scary and exciting.  Failing to plan your journey is asking for trouble along the way.

Taking out a large mortgage is something that should be carefully planned with the help of professionals.  Using a first time home buyer expert loan officer will help you save money, reduce stress and avoid surprises.

An educated home buyer is an empowered home buyer.

Congratulations on taking the first steps toward buying a house!

First Time Home Buyer Guide Contents

Home Buyer Guide

An expert guide to surviving today's housing market

Terms & Definitions

Real world explanations, not a bulked up list that doesn't apply!

Down Payment Chart

Down Payment and Credit Score requirements by loan type

Ask a Question About Qualifying for First Time Home Buyer Loans

Real Professionals. Accurate Answers. Available Now.

First Time Home Buyer Guide - 13 Article Series

Common Mortgage Terms and Definitions

Appraised Value

Appraised Value
Value as determined by an authorized appraisal initiated by the mortgage lender. The most common approach valuing your home is the sales comparable approach.  Your home is compared to recent sales in your neighborhood of homes that are similar in size and amenity to yours.  Value is adjusted on recent sales based on variances in size and amenity to determine what your home is "worth" if it were to sell today.

APR - Annual Percentage Rate

APR - Annual Percentage Rate
Used to evaluate costs associated with your loan presented as an addition to your interest rate.  Your APR is not your interest rate. 

ARM - Adjustable Rate Mortgage

ARM - Adjustable Rate Mortgage
Many ARM mortgages include a fixed rate for pre-determined term.  Also called a Hybrid ARM, common fixed periods include 3,5,7 and 10 years.

Closing Costs

Closing Costs
Includes any third party charges associated with a real estate or home loan transaction. Common costs could come from City or County transfer taxes, pre-paid property tax, homeowners insurance, mortgage insurance and mortgage interest interest, and your lender.  Closing costs can often be paid for with a lender credit.

CD - Closing Disclosure

CD - Closing Disclosure
The closing Disclosure is the final disclosure of the terms of your loan.  Your final rate should be locked, and your closing costs are as accurate as they will ever be.  The Closing Disclosure is a new form required after October 3, 2015.

Conventional Loan

Conventional Mortgage
Uses underwriting guidelines by Fannie Mae or Freddie Mac.  Conventional loans are typically a broad name for a non-government loan.  Private mortgage insurance is included above 80% loan to value (20% down payment).  Conventional loans are great for investors or first time buyers, and allow as low as 3% to 5% down payment if you're going to live in the home.

DTI - Debt to Income Ratio

DTI - Debt to Income Ratio
Used to determine the maximum housing payment you qualify for. Calculation: Total expenses as a percentage of your Gross income.

FHA - Federal Housing Administration

FHA - Federal Housing Administration
Government insured mortgages offer low rates and a low down payment to home buyers planning on living in the home as their primary residence.  FHA loans are very popular with first time home buyers.

First Time Home Buyer

First Time Home Buyer
The standard definition that most State programs use to meet first time home buyer requirements is to not have owned in the past 36 years.  Ownership is usually verified with 3 years of tax returns.

LE - Loan Estimate

LE - Loan Estimate
Replaces GFE Good Faith Estimate and TILA Truth in Lending disclosures with a single 3 page disclosure called a loan estimate, which you are required to receive within 3 business days of your loan application date. The Loan Estimate is a new form required after October 3, 2015.

LTV - Loan to Value

LTV - Loan to Value
Refers to the total of the first lien (mortgage) as a percentage of appraised value of your home.  Versions of LTV include CLTV (combined LTV) with includes any additional fixed term financing, and HLTV for home equity lines of credit that takes into consideration the maximum line of credit as a percentage of value.

MCC - Mortgage Credit Certificate

MCC - Mortgage Credit Certificate
A Mortgage Credit Certificate converts a percentage of your tax deductible mortgage interest into a tax credit.  This is a free program and can only be used when you are purchasing your first home.

Portfolio Loan

Portfolio Loan
Describes a loan that uses underwriting guidelines that may go outside of traditional loans.  Portfolio loans range in flexibility.

VA Guarantee

VA Guarantee
The Veteran Administration offers a guarantee that eliminates the need for a monthly mortgage insurance payment.  VA also offers eligible Service Members and Veterans the ability to purchase or refinance 100% of the value of your home.

Down Payment and Credit Requirements

Loan Program

Minimum Qualifying Requirements

Conventional Loans
FHA Loans
VA Loans
USDA Loans
Jumbo Loans
Portfolio Loans
Conventional Loans

Minimum Down

  • As low as 3% to 5% down payment (owner occupied)

Minimum Credit

  • Minimum 620 credit score requiredNotes

Notes

Conventional mortgage loans are a great option for first time home buyers with great credit scores.  Between Fannie Mae's HomeReady, and Freddie Mac's Home Possible programs, Conventional home buyers can get into a home with as little as 3% down payment.  Less if you are also eligible for buyer assistance or a mortgage credit certificate.

FHA Loans

Minimum Down Payment

  • As low as 3.5% down payment

Minimum Credit Score

  • Minimum 560 credit score (lower with 10% down)

Notes

FHA mortgages offer the most accessible and most flexible underwriting options for most buyers buyers.  The ability to manually underwrite a FHA mortgage make this program one of the most flexible options available on the market today.

VA Loans

Minimum Down Payment

  • No down payment required

Minimum Credit Score

  • Minimum 560 credit score

Notes

VA mortgages are only available to eligible military personnel.  Contact us for an introduction to an expert if you do not already know someone.  These programs are by far the most flexible and forgiving of any loan on the market.  With zero down payment and no mortgage insurance, you cannot beat this option if you've served honorably in the U.S. Military.  Thank you for your service!

USDA Loans

Minimum Down Payment

  • No down payment required

Minimum Credit Score

  • Minimum credit score is 640

Notes

USDA rural development loans are available if your property is located in an eligible area.  Borrowers must qualify using USDA family, qualifying and ability to repay income limits calculations.

Jumbo Loans

Minimum Down Payment

  • 20% is typical for depository institutions.  Portfolio lenders may consider as little as 10% down payment.

Minimum Credit Score

  • Even though underwriting guideline details will vary from one lender to another, minimum credit scores tend to come in at 680 in the low end, and options really open up over 700.

Notes

Jumbo mortgages are not typically a first time home buyer loan.  They are much more strict in terms of down payment, debt to income ratio, and reserves required to qualify.  For first time buyers that do meet these qualifications, a Jumbo mortgage can offer flexible terms and low rates.

There are also many great Portfolio loan options if you cannot fit in the box laid out by most depository jumbo lenders.

Portfolio Loans

Minimum Down Payment

  • Portfolio lenders may consider as little as 10% down payment.  The average down payment on a portfolio loan is 25%

Minimum Credit Score

  • Portfolio loans offer many solutions for almost any credit grade.  While you can get a Portfolio loan with a credit score below 600, it will require a large down payment to offset the risk.

Notes

There are many great Portfolio loan options if you cannot fit into the guidelines of traditional financing.

First time home buyers that are self employed may find a portfolio loan that they you can live with if your tax write offs make full income documentation impossible.

Expert Articles about Buying a House