Buying your first home can be an exciting adventure
We'll give you the information you need and steps to take to realize your dream.
Are you ready to buy a home?
Before you start shopping, make sure you're ready by asking yourself some basic questions.
- Why do I want to buy a home?
Maybe you are thinking you want to avoid unexpected rental rate increases or are looking to build equity with an investment. Nonfinancial benefits should be also considered—like a better neighborhood or school district.
- How long do I expect to stay in a home?
Typically, purchasing a home is a long-term investment. You should plan on staying in a home from 5 to 10 years to recuperate moving and closing costs, as well as to gain equity.
- Do I have a steady income?
When going through the mortgage process, you'll submit income history to qualify for the loan. You'll also have to consider your confidence in future payments without getting over your head in debt.
- Do I have money saved for a down payment and closing costs? Have I taken into account expenses for repair and upkeep?
Closing costs are about 2% to 5% of the purchase price, and although there are programs to help with a first-time homebuyer's down payment, the average amount is between 5% to 10%. Once you own a home, a general rule of thumb is to save 1% of the purchase price a year for small fixes such as leaky faucets up to a more expensive roof repair.
- What is my credit score and how does it affect my ability to get a loan?
By knowing your credit score and resolving any issues, you can improve your chances of being approved for a loan and getting the best possible rates.
- How much home can I afford?
Consider all of the costs that go into buying a home so that you can make a good decision on your home purchase price.
- How much will my mortgage payments be?
Find out how much your monthly fixed-rate mortgage payments will be based on loan amount, interest rate and loan term.
Time to get things moving
At this point, you've probably looked online at homes. You may have also driven through neighborhoods you're considering, or even attended a few open houses. Before you engage a realtor, it's a good idea to get prequalified.
Getting prequalified for a mortgage is important for two reasons. First, it lets you know how much home you can afford. Second, many realtors and sellers insist that you have a prequalification letter before they'll consider your offer on a home.
It doesn't necessarily guarantee you'll be approved for a mortgage, because a more thorough check of your documentation is still necessary. However, once you prequalify for a mortgage, your information will be saved and can be converted to a mortgage application.
What you'll need for prequalification
Start by gathering all the paperwork you'll need to provide a lender.
- The city, county or ZIP in the area of your new home
- Identification information (Social Security number or government-issued ID)
- Your contact and residence information
- Your employment status and general financial information
Plan your financing
Once you've found a home, and your offer is accepted, it's time to get started with your mortgage. We have a variety of programs available to help making home ownership affordable to first-time homebuyers—with features like low down payments and reduced mortgage insurance.
- First-time homebuyer – With this option there's no income limitations and you can qualify for up to 97% financing. You'll need to get mortgage insurance, but your premium will be reduced.
- Community Homeownership Incentive Program (CHIP) – Qualifying homebuyers can get up to 97% financing with no mortgage insurance. You'll be required to take an online homebuyer education course.
- HomeNow – Up to 95% financing is available with mortgage insurance. You'll be required to take an online homebuyer education course.
- Rural housing loan – You can qualify for up to 97% financing but mortgage insurance is required.
- Veterans administration – Veterans can receive up to 100% financing with no minimum credit score required and no income limitations.
Closing day is here
It's the big day—just a few more steps to go. Here's what you need to be prepared for closing day when the property's ownership transfer is finalized.
Who to expect
A few different people may show up to the closing appointment, depending on which state you live. It may be as little as you and your attorney. However, others can be there including the seller, the seller's agent and attorney, your agent, the title company's representative, or a representative from the bank holding your mortgage.
What to bring
Be sure you have with you:
- A photo ID
- Proof of homeowners insurance
- Your down payment
- Closing costs—unless it's being rolled into your mortgage
- Your checkbook—there may be unforeseen expenses or fees
Be prepared to sign a lot of legal documents. For your records, you'll receive a closing disclosure, the mortgage note, deed of trust and a certificate occupancy.
Once you're done, you'll receive the keys to your new home and be able to move in!
How much can I afford to spend on a home?
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Personalizing the mortgage experience
Hear the inspiring story of a first-time homebuyer fulfilling her dream.
Deputy Dustin Francis
Find out how our first-time home buyers get help at every step of the process.
Ready to get started?