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First Time Home Buyers Mortgage Guidelines And Requirements

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This BLOG On First Time Home Buyers Mortgage Guidelines And Requirements Was PUBLISHED On February 9th, 2019

First Time Home Buyers Mortgage Guidelines depends on the individual loan program the borrower applies.

We will cover the various First Time Home Buyers Mortgage Guidelines on the various loan program Gustan Cho Associates at Loan Cabin Inc. offers.

Lender Overlays Versus First Time Home Buyers Mortgage Guidelines 

There are various mortgage programs for home buyers.

  • First Time Home Buyers Mortgage Guidelines depends on the individual loan programs
  • Borrowers need to realize that not all lenders have the same guidelines on FHA, VA, USDA, Conventional Loans
  • Just because a borrower does not qualify for FHA Loan at a bank does not mean they cannot qualify for a FHA Loan with a different lender
  • All lenders need to meet FHA Guidelines on FHA Loans
  • However, lenders can have higher lending guidelines than agency minimum guidelines
  • The additional guidelines required by lenders is called lender overlays

Gustan Cho Associates at Loan Cabin Inc. is one of the very few five star national lenders with no overlays on government and conventional loans.

First Time Home Buyers Mortgage Guidelines On Down Payment Requirements

Most first time home buyers can easily afford their proposed monthly home mortgage payment. However, the issue most first time home buyers have is coming up with down payment and closing costs.

First Time Home Buyers Mortgage Guidelines On Down Payment Varies Dependent On The Loan Program:

  • FHA offers 3.5% down payment for borrowers with at least a 580 FICO Score
  • Borrowers with under 580 credit scores down to 500 FICO can qualify for FHA Loans with 10% down payment
  • Need to get approve/eligible per automated underwriting system
  • Borrowers who cannot get an approve/eligible but get a refer/eligible can be downgraded on FHA and VA Loans
  • FHA guidelines are the easiest and most lax when it comes to getting an automated underwriting system with bad credit and high DTI

First Time Home Buyers Mortgage Guidelines On Freddie Mac Home Possible

Freddie Mac’s Home Possible  has a 3% down payment mortgage program:

  • Freddie Mac Home Possible loan program was created and launched for first time home buyers
  • Home Possible is also for move-up home buyers, and retired home buyers
  • 1% down payment on single family homes
  • 5% down payment on 2 to 4 unit multi-family owner occupant homes
  • Sellers can contribute up to 3% in sellers concessions for home buyers closing costs

Freddie Mac Home Possible have maximum income limit by borrowers. Borrowers must meet certain income limits with the Home Possible Mortgage program.

The Income and Property Eligibility tool can be used to determine if borrowers meet maximum income eligibility requirements.

First Time Home Buyers Mortgage Guidelines On Freddie Mac Home One

Freddie Mac’s Home One Mortgage Program requires 3% down payment program:

Freddie Mac’s Home One Mortgage are for first time home buyers. It does not have income limits or geographic area restrictions.

Fannie Mae HomeReady Mortgage Program

Fannie Mae’s HomeReady Conventional Loan Program requires 3% down payment:

  • Fannie Mae’s HomeReady mortgage program requires 3% down payment loan program
  • This is for seasoned and first time home buyers

Here is the link to Fannie Mae HomeReady Eligibility Tool:

HomeReady’s Income Eligibility Lookup Tool

FHA Loans

FHA Loans is the most popular loan program in the United States.

  • 3.5% down payment is required for borrowers with at least 580 credit scores
  • Borrowers with under 580 FICO and down to 500 credit scores require 10% down payment on home purchase

Up to 6% sellers concessions is allowed by sellers to help with buyers closing costs.

VA Loans

There is no down payment required on home purchase with VA Loans.

  • VA does not require a minimum credit score requirement
  • VA does not have any maximum debt to income ratio maximum requirements

VA allows up to 4% sellers concessions.

USDA Loans

Like VA Loans, USDA does not require any down payment on USDA Loans and offers 100% financing. USDA allows up to 6% sellers concessions by home sellers.

First Time Home Buyer Tips

It is best recommended that first time home buyers have a few months reserves when buying home.

  • You do not want to have zero money and become a homeowner
  • There are things homeowners need to purchase
  • Landscaping tools and lawnmower is often necessary
  • Weed trimmers, snow blowers, riding mowers, rakes, shovel, and other tools are often higher priced items
  • New homeowners may need new furniture and blinds throughout the house
  • Start saving for a down payment
  • Do not apply for credit and/or purchase anything during mortgage process
  • Do not quit and/or change jobs
  • Do not trade in your car

Contact us at Gustan Cho Associates if you have any questions at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com.

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