The 411 for First Time Home Buyers


There are many factors that some might find intimidating when venturing into the housing market, especially first-time home buyers. If you find yourself in this boat, it’s likely that loans and mortgages play a heavy role in the intimidation factor.

But you’re in luck – we have information that can help you on this process. We recommend meeting with a representative at your community bank so that you can have face-to-face discussions specific to your home-buying circumstances and needs. In the meantime, we’ve compiled information about FAQs that can help guide you on your way.

- Credit Score Details: Your credit score is important in securing a loan; however, there are other factors (like income, savings, etc.) that are also relevant. If utilizing a government program (FHA/VA/RD), a lower minimum credit score around 660+ is typically accepted. When it comes to conventional loans, the minimum is a little higher at 690+. Need to improve your credit score? Your community bank can provide you with actionable tips that will help.

- Debt-to-Income Ratios: In addition to a solid credit score, you must also have a good debt-to-income ratio. Typically, this is 43% or lower, but lenders will consider higher ratios with compensating factors like a down payment of 10% or up, reserves, and / or a strong credit score.

- Loan Programs: For first-time home buyers, quality options for financing are FHA, VA, and USDA Rural Housing loans from state and local housing finance agencies. It is possible to quality for conventional loans with as little as 3% down.

Additionally, many aren’t aware that most states and counties have housing finance agencies and special programs that can assist with down payments and closing costs. By working with a community bank, you can ensure you’ll receive information about local programs that could benefit you.

- Fixed Rate vs. Adjustable Rate Mortgage: Generally, a first-time homebuyer will be better off with a fixed-rate loan. Typically, you should only consider an adjustable rate loan when the initial rate is fixed for at lease the first five years.