First-Time Homebuyers Mortgage Programs

This guide covers first-time homebuyers mortgage programs. GCA Forums Mortgage Group are experts in helping borrowers with first time homebuyers mortgage programs. Many millennial homebuyers are now entering the home purchase market. Many are still under the impression that it requires a 20% down payment and great credit to qualify for first-time homebuyers mortgage programs. This is not the case with first-time homebuyers mortgage programs.

In this blog, we will discuss first-time homebuyers mortgage programs and how renters can become homeowners with very little money. Many first-time homebuyers mortgage programs require little to no down payment. GCA Forums Mortgage Group are mortgage brokers and correspondent lenders with no overlays on government and conventional loans. First-time homebuyers mortgage programs are down payment assistance programs are offered by individual counties. Therefore, not all DPA programs are the same. Generally, most homebuyers do not have to worry about closing costs. Closing costs can be covered with seller concessions and/or lender credit.

Buying your first home is a very exciting time.

A home purchase is most people’s largest investment in their lives
Many plans many months and/or years to prepare to buy their first home
One of the most commonly asked first-time homebuyers mortgage programs is how much do I need for the down payment and closing costs?
First-time homebuyers mortgage programs by mortgage and real estate professionals is to get qualified for a mortgage as soon as possible
It does not matter whether you have the proper down payment and/or closing costs
The sooner you consult with a loan officer, the better
The loan officer will get borrowers a plan on how to prepare their credit and finance in qualifying for a mortgage

In this article, we will cover and discuss first-time homebuyers mortgage programs advice by mortgage professionals.

Do I Need To Hire A Credit Repair Company If I Have Bad Credit To Qualify For A Mortgage?

An experience loan officer will give first-time homebuyers mortgage programs advice never to hire a credit repair company to qualify for a home loan.

Hiring credit repair companies can often backfire on borrowers
Borrowers do not have to pay outstanding collections and charged-off accounts to qualify for a mortgage
Deleting older collections and charged-off accounts does not impact credit scores
Before you go out and spend hundreds of dollars, please consult with a loan officer prior to planning on hiring a credit repair company
Credit repair can do more damage then good
There are ways of boosting up your credit without going through credit repair

Credit disputes on non-medical collections and derogatory credit tradelines are not allowed during the mortgage process.

First-Time Homebuyers Mortgage Programs Advice is to Educate Yourself With Housing and Mortgage Markets

One of the most important first-time homebuyers mortgage programs advice is to educate oneself in the housing and mortgage markets.

As mentioned earlier, a home is most people’s largest investment
The mortgage process can be complex and confusing
Not all lenders have the same lending guidelines
Finding out which loan program is best for you is very important
If you are a veteran with a certificate of eligibility (COE), you should explore going with a VA loan and not FHA nor conventional loan
Borrowers with lower credit may want to increase their credit scores before applying for a mortgage
Lower credit scores mean higher mortgage rates
Also, look into the type of property you may want to buy
Condominium?
Single-Family Home?
Townhouse?
2 to 4 multi-family unit?
Today, the housing market is strong
Housing prices have gone up for the past 3 years with no signs of a housing correction
Another key first-time homebuyers mortgage programs advice is how much can you afford versus how much do I qualify?
You do not want to buy too much house
Mortgage companies will not count your personal expenses such as childcare, utilities, maintenance, and other expenses when qualify your debt to income ratios

I’m so glad you asked! I’ve put together 10 tips for first-time home buyers as they tackle the home-buying process. Put these into practice today so your first home is a blessing, not a burden.

First-Time Homebuyers Mortgage Programs Advice With Finances

Chances are you will need a mortgage on your home purchase.

Most mortgages are 30 year fixed-rate loans
This is a long commitment
Remember that it is how much you can afford versus how much you qualify that is important
Make sure to try to pay off as much debt as possible
Create a reserve in the event something goes bad
Save for a down payment and closing costs
Down payments and closing costs can be gifted by a family member
Before doing anything with your credit, consult with a loan officer
Make sure you have a solid pre-approval by a lender before entering into a real estate purchase contract
Research the area
Interview lenders and realtors
Make sure you check their online reviews and meet with them in person

Make sure that it is within comfortable driving distance to work, schools, and shopping. Attend as many open houses as possible and ask a lot of questions.

Cost of Homeownership

As a homeowner, you will be responsible for all maintenance and repairs.

When things break down, you need to fix it and cover the expenses
You do not have the luxury of contacting the landlord for a leaky faucet, or HVAC system
First-Time Homebuyers Mortgage Programs Advice is to have reserves in case of an emergency
Appliance breakdowns can cost several hundred to thousands of dollars
Eventually, the roof, windows, and HVAC systems can break down
Landscaping and plowing is the responsibility of the homeowner
The pros of homeownership is freedom, appreciation, and pride
However, there are costs that come with the benefits

Your new mortgage payment can be the same and/or cheaper than a rent payment. However, there are costs associated with homeownership.

Finding The Right Lender for First-Time Homebuyers Mortgage Programs

Any borrower with great credit, income, and down payment can qualify with any lender.

However, many borrowers may not fall into this catergory
There are two types of lending guidelines
Agency mortgage guidelines and lender overlays
All borrowers need to meet the minimum agency guidelines by HUD, VA, USDA, Fannie Mae and/or Freddie Mac
However, mortgage companies can have additional lending guidelines called lender overlays
Lender overlays are additional mortgage guidelines above and beyond the minimum agency guidelines
This is why not all lenders have the same lending requirements on FHA, VA, USDA, and Conventional loans
One lender may say no while another lender may say yes

GCA Forums Mortgage Group is one of the very few lenders with no lender overlays on government and conventional loans.

Choosing The Right Realtor After You Get Pre-Approved on First-Time Homebuyers Mortgage Programs

Homebuyers need to get along with their real estate agent.

Many homebuyers get referred by their realtor through their family, friends, loan officer, or business associates
Make sure you and your spouse interview the realtor
Check out their online reviews
Meet with them more than once
Are they experienced?
Are they familiar with the area?
Do they return phone calls, texts, and/or emails timely?

Make sure to interview more than one real estate agent before pulling the trigger.

Understanding The Home Buying And Mortgage Process

First-time home buyers should get familiar with the overall home purchase and mortgage process. There are many moving parts to the home buying process. A home purchase is most people’s financial decision they make in their lifetime. Homebuyer and mortgage process should not be stressful.

Most of our clients at GCA Forums do not stress during the mortgage process. The home buying process should be a memorable positive experience for first-time home buyers. Educating oneself on first-time homebuyers mortgage programs is not difficult and may be fun.

Getting Familiar With The Mortgage Process

Most borrowers who take time out to educate themselves in first-time homebuyers mortgage programs often do not stress during the mortgage process. First-time home buyers may want to know the options they have with down payment assistance. They may want to understand the difference between the Loan Estimate and Closing Disclosure is.

There are endless questions first-time homebuyers mortgage programs may have. Shopping for a home and entering into a real estate purchase contract is the fun part of the buying process. The mortgage process is the boring part.

The mortgage process does not have to be dreadful or bored. Just think about the potential money you can save by being a homeowner. You no longer have to waste your money on rent.

How Much Down Payment Is Required On First-Time Homebuyers Mortgage Programs

The number one question by first-time homebuyers mortgage programs is how money down payment do I need to purchase a home? It depends on the loan program. Here are the basic down payment required by home buyers:

HUD requires 3.5% down payment on FHA loans.
Fannie Mae and Freddie Mac require a 3% down payment for first-time homebuyers and a 5% down payment for seasoned home buyers
VA and USDA does not require any down payment and offers 100% financing
NON-QM Loans require a 10% to 20% down payment
GCA Forums has investors that will qualify 5% down payment Jumbo NON-QM Loans
Bank statement loans for self-employed borrowers require a 20% down payment

Down payments can be gifted. Using 401k for home purchase down payment is allowed.

How Much Are Closing Costs on Home Purchase

All mortgage transactions come with closing costs. Closing costs vary. It depends on many factors, especially location and loan programs. Closing costs are any costs and fees with the transfer and closing of a home loan. This includes origination fees and third-party charges.

Most of our clients at GCA Forums Mortgage Group do not have to worry about closing costs. They just need to come up with the down payment. Closing costs are normally covered through sellers’ concessions and/or lender credit.

Typical Closing Costs

Here are typical common examples of closing costs:

Origination charges
Discount Points
Processing/Underwriting Fees
Credit Report fees
Title Charges
Title Insurance
Recording Fees
Transfer stamps
Attorney’s fees
Appraisal fees
Surveys if applicable
Pre-paid (Escrows)
Inspection Fees
Any other third-party costs and fees

Seller Concessions and Lender Credit For Closing Costs

Lender credit and sellers concessions can be used for closing costs only. Cannot be used for the down payment. Property tax proration credits can be used for down payments. Overage seller’s concessions cannot be kicked back to borrowers. It needs to go back to sellers. In most cases with seller concession overages, loan officers use it to buy down the rate with discount points. Here are seller concessions mortgage guidelines:

FHA and USDA allows up to 6% of sellers concessions
VA allows up to 4% sellers concessions
Fannie Mae and Freddie Mac allow 3% sellers concessions on primary homes and up to 2% investment homes on conventional loans
NON-QM and Jumbo Loans allows sellers concessions but is dependent on the investor

Importance of Mortgage Pre-Approval By Loan Officers

The pre-approval process of the overall mortgage process is the most important step. One of the biggest reasons for a last-minute mortgage denial and/or stress during the mortgage process is because loan officers did not properly qualify borrowers. A loan officer needs to thoroughly review borrowers’ income, assets, credit, credit scores, public records, tax returns, and liabilities. The file should go through the automated underwriting system.

The loan officer should also thoroughly check with their company’s overlay guidelines and make sure the borrower fully qualifies. Over 80% of our clients are borrowers who got denied a mortgage by a lender or are going through stress during the mortgage process due to not being properly qualified. Due your due diligence and choose a loan officer who is experienced and a lender with no overlays.

How Much Can I Afford Versus How Much Can I Qualify on First-Time Homebuyers Mortgage Programs

The borrower is the only person that can answer how much house can I afford. Lenders will qualify borrowers on the maximum they qualify for. Mortgage underwriters do not factor the following when calculating borrowers debt to income ratios:

Personal expenses such as dining out, vacations, hobby expenses, and other personal expenses
Utility expenses such as water, scavenger, telephone, gas, electric, cable, internet, cell phone
Child care expense
Elderly care
Children extracurricular activities and quarterly trips
Medical and life insurance
Maintenance
College tuition
Other expenses not reporting to credit bureaus

Lenders only qualify borrowers on debt that report on credit bureaus. Homeowners do not want to get stuck with too much home they cannot afford. Make sure to consider overall housing expenses and not just principal and interest. Overall housing expenses are Principal and Interest, Homeowners Insurance, Mortgage Insurance, and HOA if applicable.

Do Not Add New Debt And Do Not Get New Car

Do not purchase and/or trade-in your car during the mortgage process. The average car payment is $400 per month. That is equivalent to an $80,000 mortgage. Do not apply for new credit during the mortgage process. Lenders will do periodic credit checks until the date of closing. Do not load up any credit cards and/or revolving accounts. Do not make any irregular deposits and/or withdrawals. Any irregular deposits need to be verified by mortgage underwriters. Do not change jobs during the mortgage process. Do not tell HR that you will be retiring or give notice that you will be quitting soon. All lenders will do a verification of employment. One of the questions asked on a VOE is will the worker’s job stability be secured for the next three years? If you quit or plan on retiring, HR will tell your lender that you will not be employed with them in the next three years.