First Time Home Buyer Information and Down-payment Assistance

First Time Home Buyers

Making the Dream of Buying Your First Home Come True

Buying your first home is scary. With the conflicting advice of parents, friends and coworkers; it is hard to figure out what advice to follow and where to start.

There are a lot of home loan options available today. Zero down payment loans, down payment assistance programs, FHA, VA and Fannie Mae & Freddie Mac loans are all available to those who qualify. But how do you know if you qualify?

Buying your first home doesn't have to be as scary as it sounds. Preparing yourself in advance with a few key pieces of information can reduce a lot of the anxiety and fears of being a first time buyer.

The Three Things That Will Determine Your First Home Loan

The Underwriter of your home loan applications looks at your "collateral", your "willingness to pay" and your "ability to pay". These three factors in varying degrees will narrow down your home financing options and maximum home purchase price.

First... Your "Skin in the Game"

Your down-payment is your "collateral"; your "skin in the game" that gives you something to lose.

Gathering the initial down payment is the highest hurdle first time home buyers have to overcome. FHA, VA and Fannie Mae & Freddie Mac all have different minimal requirements and programs to help you, the first time home buyer.

If you're a veteran, this is easy. VA loans require no down payment. A veteran can get a loan up to $700,000 in many areas with no down payment.

FHA loans only require 3.5% down payment. FHA loan will lend to $625,500 in many areas on a single family home: more on a duplex, triplex or a 4 unit home.

Have you heard of CalHFA? CalHFA offers second loans that with a concurrent FHA loan, only require a 1/2% down payment. CalHFA is a program offered through the state of California for future home owners who make less than 80% of the median county income. Today in Los Angeles County, that's $51,550 for a single buyer and up to $97,200 for a family of eight.

Fannie Mae & Freddie Mac financing will currently let most first time home buyers with good credit buy a home with as little as 5% down. Many Fannie Mae foreclosures are available with special Fannie Mae financing that only require a 3% down-payment and require no PMI. Like FHA, Fannie Mae & Freddie Mac will lend to $625,500 in Los Angeles County on a single family home: more on a duplex, triplex or a 4 unit home.

The down payment presents the biggest obstacle to homeownership for most buyers, especially first-time buyers. Follow this link to several down payment options you may not have considered.

Want More Information?

Franklin Advantage offers a FREE first time home buyers guide, 10 Easy Steps to Buying a Home. It's informative, easy to read and best of all, it's FREE!

*Send me my free first time buyer's guide.

Second... Your Credit is Important.

Your credit is the way the Underwriter will determine "willingness to pay". Again, FHA, VA and Fannie Mae & Freddie Mac all approach the review of your credit differently but they all look at your credit score as a major arbitrator in determining your "willingness to pay".

FHA and VA approach credit and credit scores more leniently. They both do not increase your loan costs or interest rates based on your score. FHA allows underwriters to consider credit scores as low as 580 with compensating factors.

Fannie Mae & Freddie Mac require better than average credit and reward borrowers with the best credit with their best rates and terms.

As you can see, your credit score is going to have a direct effect on the type of mortgage loan and interest rate you will be offered, so find out where you stand right away.

Here is a website that offers a free credit report. And for a nominal fee, this site will provide you with your credit scores as well. It is sponsored by the three major credit bureaus as required by the Fair Credit Act. It is not a commercial site trying to gather your personal information to sell to others.

annualcreditreport.com

If your score is a little bit lower than what you anticipated, try these simple tips to help you improve your credit for better loan results.

Third... What Can You Afford?

This sounds easier than it is. There are a lot of variables to consider when the Underwriter determines your "ability to pay".

Your "ability to pay" is your monthly income. This is easy if you have a simple "9 to 5" but becomes more complicated if you get bonuses, commissions, over-time. If you're self-employed, the underwriter will look at your last two years tax returns to see what your net income was after expenses. Do you have a part time job? Do you receive or pay child support? Do receive government assistance? There are many variables and you should let a seasoned Loan Officer help you.

FHA, VA and Fannie Mae & Freddie Mac all approach the calculating of your "ability to pay" differently. And they all will have different tolerances of what they feel will be the most you can afford to pay monthly for your home and other debts.

Franklin Advantage has seasoned Loan Officers to help you qualify for a home loan payment that fits your budget best. Contact Us today and get answers to your questions.

Don't Wait

Today's real estate market is offering extraordinary opportunities. Homes are the more affordable than they have been in generations and mortgage financing has never more competitive.

Call Franklin Advantage at (888) 414-5188

Our seasoned, professional Loan Officers are available to answer your questions, explain your options and guide you in making the best decision for you and your family. Contact us now and see how simple getting started is.