Are you a first time home buyer?

Take a look around, there is so much to review here. From basics qualifications  to purchasing your first investment property. 

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Requirements

 Before house shopping, you'll want o to speak with a lender to find out how much you potentially qualify for. That means you’re not wasting time looking at homes outside your price range. A mortgage preapproval means a lender has looked into your credit history, income stability and your current finances, and is tentatively prepared to loan money to you for a house.
To get a preapproval letter from a lender, you’ll need to provide:

  • Your ID, including Social Security number
  • All pages of the 2 most recent, consecutive months of bank statements
  • Employment verification, consisting of either a month of pay stubs or W-2s going back two years (or tax returns if you’re self-employed)
  • Lenders will also pull your credit report.

A mortgage preapproval is usually good for up to 90 days. After that, creditors usually want to take another look at your finances to see if anything has changed.
Don’t worry about getting several inquiries to your credit if you get preapproved by several lenders. They will only count as one hard inquiry if you do them within a short time frame (15 to 45 days typically).
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Types of mortgage Loans

Conventional Loans

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A conventional 30-year or 15-year mortgage has slightly stricter requirements than an FHA loan, but it does have some flexibility and longer term benefits.


   

Minimum Requirements:

  • Down payment: 3% and qualify for a conventional mortgage, although mortgage insurance will be required. Some of these low down payment programs may have income limits, be sure to check with your loan officer and Realtor for restrictions.
  • Mortgage insurance: No private mortgage insurance (PMI)with 20% down. If less, expect 0.15%-1.95% of your loan balance in PMI fees each year. Once you’ve paid down the principal to 78% of the original value of the property, you may request the PMI to be removed from your monthly payment.  
  • Credit score: Minimum 620, although some lenders may require a minimum score of 640. Keep in mind that higher (better) credit scores will entitle you to a more favorable interest rate and a lower monthly mortgage insurance payment on the mortgage.
  • Employment: Steady income and earnings from the past two years. 
  • Debt-to-income ratio: As of the end of 2018, conventional lenders allow for DTIs up to to 50% in select cases. One caveat for anyone with debt ratios over 45%: Many mortgage companies are now requiring a minimum credit score of 700 for higher debt ratios.


FHA Loans

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FHA loans are available to all types of borrowers, not just first-time buyers. The government insures the lender against losses that might result from borrower default. 


 

Minimum Requirements:

  • Down payment: Minimum 3.5%-10% down payment with a credit score range of 500-580.  The down payment can come from your own bank accounts, a gift from a relative, and even local down payment assistance programs.
  • Debt-to-income ratio: Front-end ratio is 31% and the back-end is 43%. Front-end ratio considers only housing-related costs, such as the monthly mortgage payment, property taxes and insurance. Back-end ratio looks at all monthly debt, including housing costs, car loans, credit card payments and any other recurring debt.
  • Residence: Primary residence for at least the first year. Includes single-family-home or a two- to four-unit property.
  • Employment:Steady income and proof of employment for the last two years, with explanations for any frequent changes in employment.
  • Mortgage insurance: Required regardless of down payment amount. You pay two mortgage insurance premiums on an FHA loan — the upfront mortgage insurance premium, and the monthly mortgage insurance, which you pay every month for the life of the loan. 

VA Loan

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Veterans Affairs Loans are benefit active-duty military personnel, reservists, veterans and their families. The VA guarantees a portion of the loan, which enables lenders to offer more favorable terms to military personnel.

  

Minimum Requirements:


  • COE: VA loan certificate of eligibility , is required. Other specific documents and identification are required. Military personnel and veterans can apply online, through a lender or by mail after completing this form.
  • Down payment: 0 down payment
  • Mortgage insurance: No PMI fees; however, there is a funding fee associated, which is charged at closing and is usually financed on top of the loan amount. The amount of the funding fee will depend on whether the veteran is using eligibility for the first time. If the applicant has a disability related to his or her military service, the funding fee may be waived.
  • Credit score: VA loans do not have a minimum credit score requirement, but most lenders that fund VA loans have a minimum cutoff of 620. The VA loan program only requires that the lender review the entire loan profile to make sure the veteran has the ability to repay the loan.
  • Income: There’s no minimum income threshold to meet, although applicants must still be able to show proof of steady income.
  • Debt-to-income ratio: Suggested debt-to-income ratio at or below 41%. 

Resources

Home Search

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Want to search for homes currently for sale? Click below to search for homes.

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Buyers Checklist

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Want to know what to expect when purchasing a property? Print for a step by step guide through a seamless transaction. 

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Buyer Advisory

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 The Buyer's Advisory is designed to make the purchase of real property as smooth as possible. Some of the more common issues that a buyer may decide to investigate or verify concerning a property purchase are summarized in this Advisory.   

Learn more

Get Pre-Qualified

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Thinking about buying a home? Click here and complete a brief survey to see where you are on your path to homewonership! 

Start here

Check Your Credit

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Not sure what your credit looks like? Check your credit report here. This is the only source for your free credit report, authorized by Federal Law. 

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INTERESTED IN APPLYING FOR DOWN PAYMENT ASSISTANCE?

Want to know if you qualify for one of the down payment assistance programs listed. Click below to get started.

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