How to Qualify for a First-Time Homebuyer Loan
If you are looking at buying your first home, there are many loans and grants that can help you qualify for a first-time home purchase. Qualifications for first-time home buyers depends on the type of mortgage and the lender, but there are some general guidelines you have to follow.
The four most common first-time home buyer loans are the FHA loan, the conventional 97 loan, the Fannie Mae HomeReady loan, and the Freddie Mac HomePossible loan. Here are their various requirements:
● FHA loan. FHA loan requires a 3.5% down payment, a minimum of a 580 FICO credit score, and a 50% debt to income ratio maximum. There is no income cap, and you can get a one, two, three, or four-unit property.
● Conventional 97 Loan. This type of loan requires a 3% down payment, and a 620- 665 credit score minimum. The homie you apply for must be a single-family home, and your debt-to-income ratio should not exceed 43%. Like the name states, you can have a loan-to-value rate of up to 97%.
● Fannie Mae HomeReady Loan. To be eligible for a Fannie Mae loan, you must have a 3% down payment and a 660 FICO credit score. Your debt-to-income maximum should not exceed 45%, and your loan-to-value maximum should not be over 97%. Unlike the first two loans, to be eligible for a Fannie Mae loan, your income can’t exceed 100% of the median income for that area.
● Freddie Mac HomePossible Loan. Just like the Fannie Mae loan, the Freddie Mac loan does have an income requirement that your annual income cannot exceed 100% of the median income for that area. Freddie Mac loan requirements are the same as a Fannie Mae loan requirements, requiring a 3% down payment, a 660 FICO credit score, 45% debt-to-income maximum, and a 97% loan-to-value maximum.
If you’re interested in applying for any of these first-time home buyer loans, then the best way to determine your eligibility is to gather your information and go to your housing authority or your bank. It’s important to make sure you are qualified for a loan before you start shopping for your home. Contact me if you have questions and I would love to help!