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Are you a first-time home buyer? Are you a home buyer who hasn’t tried to purchase a home in several years? There are some important tools you should know about when beginning the search for a new home and a home loan.

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FHA.com is a privately owned website, is not a government agency, and does not make loans.

Home Buyer Tools for First-Time Borrowers

May 24, 2021

Home Buyer Tools for First-Time Borrowers
Are you a first-time home buyer? Are you a home buyer who hasn’t tried to purchase a home in several years? There are some important tools you should know about when beginning the search for a new home and a home loan.

There are many tools for various stages of the home loan process. For example, if you find a home you want to purchase but aren’t sure what your monthly mortgage commitment will be, there are online mortgage calculators that can help. But such tools get discussed frequently, what about lesser-known options borrowers have?

Borrowers who need to work on their credit should start reviewing the information currently published about improving credit. For example, the three major credit reporting agencies (Experian, TransUnion, Equifax) all have consumer education tools about fixing your own credit.

Did you know some credit reporting agencies offer fair credit and bad credit help in the form of credit card match programs for people trying to improve their credit scores? Your lender may also have an option--be sure to ask long before you consider filling out paperwork to apply for your  home loan--credit repair takes time.

Some borrowers are not as worried about credit scores as they are making their down payment. Borrowers have the option to apply for down payment grants, which are usually aimed at first-time home buyers.

But did you know that many of these down payment grant programs offer help for borrowers who have had no ownership in a principal residence in the last three years? These people too are considered “first-time home buyers.”

Who else is considered a first time buyer? It depends on the program, but in general the following people may also qualify for down payment help:
 
  • Single parents who only owned a home with a former spouse.
  • Displaced homemakers who only owned property with a spouse.
  • Those who owned property not permanently on a permanent foundation.
  • Those who only owned a property not in compliance with building code and cannot be brought into compliance for less than the cost of a permanent structure.
Down payment help is often not permitted for construction loans--make sure the type of mortgage you are applying for permits down payment grants. In most cases you can have a down payment grant as long as it meets FHA and lender requirements for sourcing.

Your down payment assistance must meet sourcing requirements including no down payment funds coming from payday loans or non-collateralized lending.

The FHA official site features an option for borrowers who need help preparing for a home loan--you can call the FHA at 1-800 CALL FHA to request a referral to a local, HUD-approved housing counselor who can help.

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Learn About the Path to Homeownership
Take the guesswork out of buying and owning a home. Once you know where you want to go, we'll get you there in 9 steps.

Step 1: How Much Can You Afford?
Step 2: Know Your Homebuyer Rights
Step 3: Basic Mortgage Terminology
Step 4: Shopping for a Mortgage
Step 5: Shopping for Your Home
Step 6: Making an Offer to the Seller
Step 7: Getting a Home Inspection
Step 8: Homeowner's Insurance
Step 9: What to Expect at Closing

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