5 Types of Mortgage Loans for First-Time Homebuyers

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Are you wondering what types of mortgage loans you qualify for through mortgage lenders as a first-time homebuyer? If so, then please continue reading. We want to explain the kinds of new loans homebuyers should look for first and why. The type of loan you get for your home can make a huge difference in terms of what payment you will have. Here is a breakdown of some of the most popular types of loans a first-time homebuyer may qualify for.

Types of Mortgage Loans:

First-time homebuyer programs

As we go through this list, you will notice that each type of mortgage loan listed varies based on its criteria. Some require military experience, while others have specific requirements, such as credit scores. We can help you figure this information out if you are unsure where you fall. Just look through the loans to see if you think you are ready to get the process going.

Prior to getting a home loan, make sure you are also taking steps to get your finances in order. This means saving up money for your down-payment, repairing your credit if it needs a boost, and paying down as much of your debt as you can. These steps can help you be more likely to qualify for a mortgage before looking at properties to buy.

FHA Home Loans

FHA loans are the most common mortgage loans available to any first-time homebuyer with weaker credit scores. The program can go down to a credit score of 500 with a higher down-payment. If you want to pay less than 10% down, you need to have a credit score of no less than 580. That allows you to put only 3.5% down on your home.

VA Home Loans

Another type of mortgage option you have could be a VA loan. However, this is a loan that only current or former military members, or surviving military spouses, can qualify for. So long as your veteran status is in good standing, you can be eligible to buy a new home with no money down towards the house, and typically the loan comes with a lower than a traditional interest rate. This program gives veterans a little bit of a thank you from the government for their service.

USDA Home Loans

The USDA program for home loans is unique as well. Should the home you are buying be in a more disadvantaged area, such as a rural town or suburb, you may be able to get a USDA loan. The United States Department of Agriculture guarantees these loans, so traditional mortgage lenders know that someone will cover the loan should you wind up unable to pay for the property. If the property meets the conditions and meets the requirements, this property may require no money down and have lower payments than other loan options.

Adjustable-Rate Home Loans

Another option that can be suitable for some first-time homebuyers is called an adjustable-rate home loan. This is a loan where the interest rate varies and can change throughout the course of the loan. Your mortgage will usually have some form of a fixed rate for a set period at the beginning of the loan. Once that time is up, your interest rate will fluctuate depending on the market. That means your payment can go up or down depending on how the market is doing.

FHA Loan Houston

Fixed-Rate Home Loans

The alternative to the adjustable-rate home loan is the fixed-rate home loan. This is a simpler type of loan where your mortgage lender determines what interest rate it will charge for the full life of the loan. This is what you pay until the full mortgage is paid off. If the market goes up, you do not see an increase in a mortgage payment. However, if the market goes down, you also do not get a decrease in payment.

Rock Mortgage Can Help You Determine What Types of Mortgage Loans You Qualify For

When you are ready to start the process of getting your first home, reach out to us here at Rock Mortgage. We can go through the types of mortgage loans available to you and explain what makes them unique. Contact us now so you can get into your first home as soon as possible.

Here is more about our Process:

The mortgage loan process with a broker generally involves several key steps. Here’s a typical sequence of events:

  1. Pre-Qualification:
    • Initial Consultation: You’ll have an initial discussion with the mortgage broker to discuss your financial goals, needs, and preferences.
    • Financial Assessment: The broker will review your financial situation, including income, credit score, debts, and assets.
    • Pre-Qualification Letter: If you meet the initial criteria, the broker may issue a pre-qualification letter indicating the loan amount you might qualify for.
  2. Loan Shopping:
    • Loan Options: The broker will present you with various mortgage loan options from different lenders, including interest rates, terms, and fees.
    • Comparison: You’ll work with the broker to compare these loan offers and choose the one that best suits your needs.
  3. Application:
    • Formal Application: Once you’ve selected a loan, you’ll complete a formal mortgage loan application with the broker. This involves providing detailed financial information and supporting documentation.
  4. Document Collection:
    • The broker will collect and review your financial documents, which may include pay stubs, bank statements, tax returns, and other relevant paperwork.
  5. Credit Check:
    • The broker will order a credit report to assess your creditworthiness, which is a crucial factor in loan approval.
  6. Rate Lock:
    • If you choose to lock in an interest rate, the broker will work with the lender to secure the rate for your loan.
  7. Loan Submission:
    • The broker will submit your complete loan application, along with all necessary documents, to the chosen lender.
  8. Underwriting:
    • The lender’s underwriting department will review your application, documents, and credit report to assess your eligibility for the loan.
  9. Conditional Approval:
    • If the underwriter approves your loan with conditions, the broker will work with you to satisfy these conditions, which may involve providing additional documentation or explanations.
  10. Clear to Close:
    • Once all conditions are met, the lender issues a “clear to close” decision, indicating that the loan is approved and ready for closing.
  11. Closing Preparation:
    • The broker will coordinate with all parties involved, including the title company, to prepare for the closing.
  12. Closing:
    • At the closing, you’ll sign all necessary documents, including the mortgage note and deed of trust. You’ll also pay any closing costs and fees.
  13. Funding:
    • After the closing, the lender funds the loan, and you become the homeowner.
  14. Post-Closing:
    • The broker may continue to assist with any post-closing issues or questions you may have.

Throughout the process, our mortgage brokers act as an intermediary between you and the lender, helping you navigate the complex world of mortgage lending, comparing loan options, and ensuring a smoother and more efficient process. It’s essential to communicate openly with your broker and provide all requested documentation promptly to keep the process on track.


Billy Evans

Billy Evans

Billy Evans is a Loan Officer at Rock Mortgage. As a father and family man Billy understands the importance and want to have a beautiful home to raise and grow a family in. That is why he has made it his mission to help everyone get the best mortgage solution possible to fit their financial needs. Billy is also a former United States Marine, as a Veteran himself and mortgage professional he has combined his knowledge and experience to passionately serve Veterans. When Billy isn’t working, he enjoys spending time with his wife, daughter, and their puppy Ollie!