Mortgage Financing for First Time Home Buyers

Allison Beatty
LoanBiz Columnist


If you're a first time home buyer, you're probably feeling a little overwhelmed by the mortgage process. How much home can you afford? What type of mortgage is right for you? Here's a primer on options for first time home buyers.

Do Mortgage Research

Before shopping for homes, make sure that you do some research into interest rates and what your mortgage payment would be. Many Web sites have mortgage loan calculator, with some especially designed to help first time home buyers understand their options. Look for:

• Tips on how much home you can afford.
• How the down payment amount affects your mortgage.
• What your debt ratio should be.
• Mortgage lenders guidelines on income levels, employment history, etc.

Special Mortgages for First Time Home Buyers

In recent years, mortgage lenders have added many affordable mortgage options designed to get first time home buyers into their first homes. Among the possible mortgage features are:

• Mortgage down payment assistance
• Low loan rates
• Some reduced mortgage fees
• Lower down payment options

Down Payment Assistance for First Time Home Buyers

While a 10 percent home mortgage down payment is nice, it often is unrealistic for first time home buyers. Many mortgage lenders recognize this and offer mortgages with a 3 to 5 percent down payment option. This will help you get into a home quickly, but realize that:

• You'll have a smaller equity in your home.
• You'll likely have to pay private mortgage insurance.

The Mortgage Application Process

When applying for a mortgage, you'll need to bring the following information and documents:

• The last two to three pay check stubs.
• Information on your rental history and any long term debts.
• Your driver's license.
• Recent bank statements.
• Tax returns for the past two years.

Buying your first home is an important milestone. As you start the process, take time to do mortgage research, ask questions, and be prepared with employment and financial data to speed your path to becoming a first time home buyer.

Source
U.S. Department of Housing and Urban Development

About the Author
Allison E. Beatty is a syndicated real estate writer who has been writing home improvement columns for 15 years.