Tips for First Time Home Buyers: Credit, Mortgage Options and More

by | Jun 19, 2019 | Home buying

We know buying a home can be overwhelming, especially if it’s your first time! That’s why we put together this list of tips for first time home buyers to cover five basic things you should be aware of when you begin the home-buying process.

Financial Tips for First Time Home Buyers

1. Credit Scores and Loans

FHA Loan

If you don’t qualify for other types of home loans, you may still qualify for an FHA loan since they have the lowest credit requirements—it’s easier to qualify with a score of at least 580 but you can qualify with a credit score as low as 500. This loan is even more easy to qualify for if you’re able to put down a larger down payment of at least 10%.

VA Loan

The Veteran’s Administration makes VA Loans available to veterans who have served in the active military for six months or in the reserves or National Guard for six years. There is no minimum credit score required but lenders may have their own minimums and having a higher score will increase your odds of approval.


The US Department of Agriculture guarantees loans in eligible rural areas of the country (97% of the country is considered to be within eligible rural areas). This type of loan is available for moderate to low-income homebuyers with a minimum credit score of 640.

FHA 203k Loan

If you’re interested in buying a fixer-upper or considering investing in a home to “flip,” this is the loan for you! FHA 203k Loans are a type of home renovation loan that includes both the cost of buying a home and the renovation costs; they’re ideal for someone who wants to rehab a damaged or older home. The minimum credit score to qualify is 620.

Conventional Loan

One of the most common types of home loan, Conventional Loans are offered by private lenders and aren’t government-insured like the other loans on this list. They are typically serviced through Fannie May and Freddie Mac. Conventional Loans have a minimum credit score requirement of 620.

2. Research Mortgage Rates and Know What You Can Afford


couple-researching mortgage rates

The general rule is that your monthly expenses shouldn’t exceed 36% of your gross monthly income. Start by adding up your monthly debts and figuring out what percentage they are of your income. Comparing that to the 36% expense goal will give you a decent idea of how much you can comfortably spend on your mortgage (remember to subtract your current rent or housing payments, since you won’t be making those payments once you move to your new home!). Also remember to consider your mortgage rate, since the interest will be included in your mortgage payments rather than just being a monthly percentage of the total cost of the home.

Generally speaking, the higher you’re able to put down as part of your down payment, the lower your monthly payment will be. That doesn’t mean you should completely wipe out your savings to make your down payment though: it’s always a good idea to have some savings in reserve for a rainy day. Most financial advisors recommend having at least a minimum of three months of expenses saved up in reserve, just in case something unexpected happens, so you’ll be able to cover necessary expenses until your family gets back on their feet.

3. Ask About Additional Costs and Fees

When you’re considering buying a new home, it’s easy for the mortgage to get all the attention since it’s the largest expense but make sure to consider any additional expenses that may come up after buying a new home. These expenses include things like property taxes, homeowner’s insurance, homeowner’s association fees, and any repairs that will be necessary on the new home. A lot of these expenses, especially property taxes and homeowner’s insurance, might be something you’ve never considered before if you’ve only rented in the past, which is why it’s important to consult with a trusted advisor, like your realtor or mortgage lender, to make sure nothing surprising will come up after the process is complete.

4. Figure Out What Features Are Most Important to You

Before you even start looking at houses, you can save a lot of time up front by carefully considering your deal-breakers—both “must haves” and “must nots.” This can cover aspects like the location of the home, the style, and size of the home, number of bedrooms and bathrooms, general layout, whether it has a yard and anything else that you need to make your house into your dream home. Of course, this is an incredibly personal list of considerations that will vary from person to person and family to family, so it’s not as easy as just looking up the best options online. Do you need to be close to schools? Close to work? Closer to your extended family? What kind of neighborhood are you looking for? It’s a lot to consider, but it’s worth the time and will save you a lot of frustration if you do the work up front.

5. Find the Right Realtor

Your realtor is your ally in the home buying process. They’re on your side and are committed to helping you find your dream home. That’s why it’s so important to find a realtor you connect with and who understands what you’re looking for. Like any other long term relationship, make sure your realtor is knowledgeable, licensed, has experience, and is familiar with the area you’ll be buying in. If they have any professional awards, that’s a good sign too. Most importantly, don’t underestimate the importance of having a good rapport and comfortable communications with your realtor. The average homebuyer spends around six months—from finding a realtor and lender to viewing homes, to closing—going through the home buying process, so it makes sense to find someone you’ll want to spend that much time with.

At Dream Homes by Jen, we’re committed to helping you find your dream home in Kansas City. Contact us today to set up a consultation and get the process started!

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