If you're looking to purchase a home for first time home buyers in Houston and feel overwhelmed, you're not alone! The process of buying a house is a complex and nuanced beast, but you can start by breaking it down one step at a time.
Please familiarize yourself with each step of the first time home buyer down payment process, then string them all together and tackle them after you are an expert in each. You can also refer to our commonly asked questions.
First, start with the down payment. A down payment is a concept used as a catchall for several distinct home buying processes. Still, it would be best if you familiarized yourself with all of your options before you approach a mortgage lender.
Here, you can find all about what a down payment is, your options when making one, and how we can help!
What is a Down Payment for First Time Home Buyer Down Payment Program?
A down payment is a portion of a total sum that buyers submit to secure their purchase without paying the full sum upfront. As a rule of thumb, a down payment for a house is generally twenty percent of the home's total price.
Nine times out of ten, a down payment is made out of pocket or is financed through a loan that is made to appear out of pocket. Mortgage lenders Houston tends to look down on such sly arrangements, however.
Things like cars, boats, houses, and other similarly large sum purchases will usually ask for a down payment. If they do not require a down payment, then the seller will usually specify "zero down," which is a common way of indicating that there is no down payment expected where there usually would be.
So, when you are looking at homes, let's say your budget is in the $200,000 range. A house that costs would usually ask for a $40,000 down payment to secure the home.
You determine how much you would like to put "down" when it comes to down payments. This is good news for some more seasoned or savvy buyers, but first-time homeowners may feel overwhelmed or pressure to keep more cash on hand during the sale.
But these rules are not hard and fast. First-time home buyers have plenty of resources at their disposal to find accessible financing options for homes.
Your mortgage lender should have a bevy of different options for first-time buyers.
Down Payment Options for First Time Home Buyer Down Payment Program
First time home buyers will find a ton of different avenues available to them when securing capital for a down payment. While there are distinct advantages to putting twenty percent down at closing on the deal of a house, there are programs that allow some home buyers to put as little as three percent down towards purchasing a home, we can help!
For some, this difference may seem like a pittance. For first time buyers, however, these savings go a long way! Usually, first time buyers are young families eager to take the plunge in their starter homes. For them, these types of savings can be life-changing.
Sometimes, it is advantageous for buyers to put down even larger amounts than twenty percent of the home's total purchase price. In cases like these, homeowners are looking to minimize monthly payments, lower interest rates, and lower mortgage insurance costs.
(So many costs involved with buying a home!)
Mortgage insurance is one of those pesky things you do not consider until you have been forced into getting it. Sometimes, a down payment of 20% or more can be enough to assuage the need to purchase insurance.
But what should you do if you are a first-time buyer who not only cannot afford a twenty percent down payment but also can NOT afford a concurrent mortgage payment on top of lower down payment? Is homeownership out of your reach? Not quite!
Future Earning Power
Mortgage lenders in Houston will also take into account your future earning power in addition to your realized income. Solid credit history and a good relationship with your lender can make the difference between an impossible sum and a fully realized homeownership!
First Time Home Buyer Down Payment Programs
Some municipalities and cities have first time home buyer down payment programs designed to help residents with a down payment. These usually involve negotiating on your behalf with a mortgage lender or providing you with a lump sum of thousands of dollars in cash to supplement your down payment.
First Time Home Buyer Down Payment Credit Assistance Based Programs
If bad credit inhibits you from buying your first house, consider a loan through the Federal Housing Administration, which can aid low-income buyers, assist with a first time home buyer down payment, and buyers with poor credit.
But be warned: sometimes these programs are not zero down programs for the homebuyers themselves, and you still may be required to put some money--usually below 5%--down for a home.
When it comes to helping first-time home buyers achieve their dreams of homeownership, we want to ensure transparency and clarity in our eligibility criteria. To qualify for our loan programs designed exclusively for first-time buyers, please take note of the following key requirements:
- First-Time Buyer Status: To be eligible for our first-time home buyer loans, you must not have previously owned a residential property. This includes not having had any ownership stake in a primary residence within the last three years.
- Credit Score: While credit score requirements may vary depending on the specific loan program, a fair to good credit score is typically required. However, we understand that everyone's financial situation is unique, and our experienced mortgage professionals can work with you to explore options if your credit score is less than perfect.
- Income Verification: You'll need to provide proof of a stable and sufficient income to support the mortgage payments. Income requirements may vary based on the loan program and the cost of the home you intend to purchase.
- Down Payment: Most of our first-time buyer programs offer competitive down payment options, and some may even provide assistance with down payment and closing costs. Be prepared to discuss your down payment preferences and financial capabilities during the application process.
- Debt-to-Income Ratio: Lenders typically consider your debt-to-income (DTI) ratio, which compares your monthly debt payments to your income. A lower DTI ratio is generally more favorable for loan approval.
- Residency and Citizenship: You must be a legal resident or citizen of the United States to qualify for our loan programs.
- Completion of Homebuyer Education: Some of our programs may require first-time buyers to complete a homebuyer education course to ensure you are well-informed about the homebuying process.
Please note that these eligibility criteria are intended as general guidelines, and specific requirements may vary based on the loan program and the lender's policies. We encourage you to reach out to our dedicated team of mortgage experts who will be happy to discuss your unique situation and guide you through the application process, making your path to homeownership a reality.
Do you have questions about the first time home buyer down payment program that weren't answered in this blog? Contact Rock Mortgage today. If you're ready to apply for a home mortgage, you can do so online.
What's The First Time Home Buyer Down Payment Program? | Rock Mortgage — Houston, Texas