Buying your first home is a big step in adulthood. It is also an exciting time with moments of anxiety sprinkled in. Saving for your first home requires planning and a lot of discipline but in the end, it will be well worth it.
Most counties and city governments have first time home buyer and financial assistance programs. You should check their website to see when they sponsor how to qualify first time home buyer workshops.
First time home buyer programs fall under the Housing and Urban Development division of the federal government. HUD oversees the Federal Housing Administration, which insures the loans. If the buyer defaults on the loan the FHA backing insures the lender will be made whole.
Although non-profits are contracted to work with local entities to oversee the programs, each jurisdiction has separate requirements.
The overall goal of a homeownership program is to assist people that normally would not qualify to buy a home on their own. Low-income individuals, who successfully complete the programs receive down payment assistance.
Are you looking to buy a home? Keep reading to learn how you can qualify for first time home buyer programs and get assistance with your downpayment.
Find How to Qualify First Time Home Buyer Programs for Your Area
If you are asking yourself if it's time to buy a home but aren't sure where to begin, consider attending a homeownership program. There you will learn the ins and outs of homeownership and what will be required to purchase a home.
Upon completion, you will be more prepared to embark on the journey to owning a home.
To find, How to Qualify First Time Home Buyer programs in your area, do an online search. You can also contact your local city and county municipalities for a list of programs.
Contact the agencies offering the programs to see when the next one starts. Get registered and be intentional about attending.
Learn What the Programs Offer
A good program will go over the basics of the mortgage process. This includes:
- Finding a realtor
- Calculating how much home you can afford
- Understanding down payments and closing costs
- Financial responsibility
Most programs also go over budgeting and credit repair. Buying a home is contingent on your credit history, work history, and debt to income ratio.
There are first time home buyer programs with bad credit options. It may be harder to get a loan but following the economic crash of 2008, lenders are more willing to give applicants a deeper look. Plus, you have the FHA backing the loan.
Check out the Eligibility Requirements
Review the eligibility requirements for your local programs. There may be requirements involving the areas you can live in. Some city programs only provide financial assistance if you purchase a home in certain residential zones.
For county assistance, the home has to be within a certain county grid.
Applicants will also have to meet income requirements and have a minimum credit score. These programs are also open to individuals who have not owned a primary residence in the past three years.
Another important requirement to be aware of is the amount of time you must reside in the home. These programs are for people that intend to reside in the home for an extended period of time. If you sell the home, you could be required to repay all or a prorated portion of the assistance provided.
Complete the Program and Get Your Certificate
Once you successfully complete the program you will receive a certificate. Any grants or loans you qualify for will not be paid directly to you. Once you find a lender, let them know you participated in the program.
The loan officer will know how to secure your funds once you're ready to close on your home. Be sure to verify how long your certification is valid. You don't want to wait too long to find a home and learn the money is no longer available.
What Happens Next?
Congratulations! You have successfully completed a homeownership program. If you still want to buy a home you need to verify the deadline for using your FHA down payment assistance.
Before starting the search for your new home, review what you learned in the program to ensure you fully understand the process. Successfully completing a program is not a guarantee that you will become a homeowner.
Explore the Different Types of Loans
Do your homework. Review the types of loans you are required to apply for in order to receive assistance. Not all mortgage types fit the criteria. Nor is every lender accepted under the terms of the program.
You will want to explore government-backed loans including FHA, USDA, and VA loans. If you choose a conventional loan you can pay a lower downpayment.
Start Saving for Your Downpayment and Closing Costs
Once you know you're ready to buy a home you should start saving towards the purchase. Understand how much house you can afford to buy and what neighborhood you want to live in.
Although you may qualify for loan assistance through the program it may not be enough to cover your downpayment and closing costs. It is common for real estate agents to negotiate a deal where the seller is willing to pay all closing costs. Make sure your agent knows that you are using FHA down payment assistance.
Going through a home buyer program is not just for financial assistance. It is possible that the home of your dreams is not in the designated area for funding. In this case, you will need to come up with the money needed to get into the home.
See If You Qualify for a Mortgage Loan
Another thing to do on your homebuying checklist, and this should be in your top three, is to understand your credit. Pull your free credit report from the top three agencies, Equifax, Experion, and TransUnion. Although there is first time home buyer programs with bad credit allowances, you want to be in the best position to get a loan.
Work on paying off current debts. Negotiate with creditors on old debts to reach a settlement. Show the lenders that you are serious about the process.
A portion of the first time home buyer program will teach you how to prepare a budget. You may have to use your real finances and work on the budget through the course of the program.
Following the completion of the course, continue to budget.
Get Pre-approved for a Mortgage
You may have to go through a couple of lenders to get pre-approved for a mortgage. Understand that getting pre-approved is not an actual guarantee for a loan. The pre-approval shows that if nothing changes in your credit or financial status you will likely get the loan.
The pre-approval will also tell you how much house you can afford to buy.
Once you find a home the real approval process begins. The lender will do a complete look into your credit and financial history. You will be required to present tax returns, pay stubs, and documents pertaining to stocks, 401Ks, and other holdings.
Go House Shopping
After you have been pre-approved for a mortgage it is time to go house shopping. A good idea is to make a list of your must-haves and what you can live without.
Remember the requirements of your financial assistance. Once you find the perfect place, make an offer and get approved for a mortgage.
Close on Your Home
The most stressful part of the home buying process for any buyer is the closing. This is where you and the seller, along with your real estate agent, and the lender, sign the final paperwork. Once the papers are signed and notarized, you are officially a homeowner.
The seller will turn over the keys at the closing.
Closings can take 30 to 60 days to complete. During this time you will have a home inspection, which includes checking for termites. You and the seller will negotiate who is responsible for any major repairs that are needed.
It is highly unlikely that someone from a first time home buyer program can purchase an as-is, rehab property.
Celebrate Your Accomplishment
Buying a home is a huge accomplishment worth celebrating. Once you get settled into your new home, plan a small celebration with close family and friends. For some people, it is a custom to bless a new home during a house warming event.
Whichever way you choose to celebrate, it is deserving because not everyone has the opportunity to own a home.
Open the Door to Your New Home
Successfully completing a How to Qualify First Time Home Buyer program, is the first step to homeownership for a lot of people. The downpayment assistance places you another step closer to getting the keys to your new home.
Once you're ready to go house shopping, you'll need a real estate agent. This is where we come in. Click here, enter your demographic information and we'll provide a list of qualified agents in your area.