{"id":28946,"date":"2021-12-30T12:07:50","date_gmt":"2021-12-30T20:07:50","guid":{"rendered":"https:\/\/www.homelight.com\/blog\/?p=28946"},"modified":"2022-01-04T12:23:54","modified_gmt":"2022-01-04T20:23:54","slug":"buyer-first-time-home-buyer-loans","status":"publish","type":"post","link":"https:\/\/www.homelight.com\/blog\/buyer-first-time-home-buyer-loans\/","title":{"rendered":"We Answered Your Top 12 Questions About First Time Home Buyer Loans (In Exquisite Detail)"},"content":{"rendered":"

There\u2019s a lot to consider when buying a home. Determining where you should buy and what house you can afford<\/a> are important early steps, but it\u2019s all hypothetical until you sit down with a lender and start talking real numbers.<\/p>\n

Unless you\u2019re paying cash<\/a> for your new home, you\u2019ll need a mortgage loan. And if you\u2019re a first-time buyer, you\u2019ll probably have more than a few questions about types of loans, how much down payment you\u2019ll need, and how to qualify<\/a> for the right loan for you.<\/p>\n

We\u2019re breaking down some of the most common questions about first-time home buyer loans with expert help from Richie Helali, a HomeLight Home Loans<\/a> mortgage specialist. We\u2019ve also asked top Chicago<\/a>-based real estate agent Debra Dobbs<\/a> for her insight \u2014 and with 37 years in the business, she\u2019s certainly worked with a first-time buyer or two.<\/p>\n

So, let\u2019s get right into the questions (and answers!).<\/p>\n

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Source: (Wes Hicks \/ Unsplash)<\/figcaption><\/figure>\n

Who is considered a first-time buyer?<\/h2>\n

Contrary to popular belief, first-time home buyers aren\u2019t necessarily people who have never bought a home before.<\/p>\n

\u201cFor the purpose of home loans, a first-time homebuyer is defined as somebody who has not had an ownership interest in a property in the previous three years,\u201d Helali explains.<\/p>\n

This means that your name can not have been listed on the deed of any house or piece of land for the past three years \u2014 whether you\u2019ve lived there or not. This includes rental or investment properties<\/a>, co-ownership of a relative\u2019s home, or an empty lot<\/a> you bought for cheap but haven\u2019t built on yet.<\/p>\n

As long as you haven\u2019t had a stake in real estate for 36 months, you\u2019ll probably be considered a first-time home buyer for loan purposes\u2014 we\u2019re not writing anything in stone here, as loan terms can and do vary and are always subject to change.<\/p>\n

Are there loans for first-time homebuyers?<\/h2>\n

In truth, most home loans are open to anyone who qualifies.<\/p>\n

\u201cGenerally speaking, there isn\u2019t a type of loan that specifies, \u2018Hey, this is only for first-time buyers,\u2019\u201d says Helali.<\/p>\n

Instead, some loans simply offer more flexibility than others, and there are first-time homebuyer programs<\/a> that you may be eligible for. These programs can help with factors like your down payment<\/a>, added flexibility if your credit history<\/a> is less than stellar, repair funding for qualified homes, and so on.<\/p>\n

Many of these loans and programs are government-backed<\/a>, some are conventional<\/a> (private), and some programs are hyper-local, while others are offered nationwide. Each type of loan or program will have its own qualification criteria, but your income, down payment, and credit history will always be considered.<\/p>\n

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Source: (Cameron Venti \/ Unsplash)<\/figcaption><\/figure>\n

What are government-backed loans?<\/h2>\n

Government-backed mortgage loans<\/a> are just that \u2014 loans wherein the government will compensate the lender for lost funds if the borrower fails to repay the loan. Because lenders carry less risk, these types of loans are a popular offer for first-time buyers who may not have a large down payment<\/a> or a strong enough credit score to qualify for a conventional loan.<\/p>\n

FHA loans<\/h3>\n

The Federal Housing Administration<\/a> (FHA) is a component of the United States Department of Housing and Urban Development<\/a> (HUD), and FHA loans can offer big advantages for first-time buyers. Namely, down payment amounts as low as 3.5% plus more accommodating credit qualifications.<\/p>\n

Your lender can go over the specifics with you, but baseline FHA qualifications include:<\/p>\n