How To Get Approved for a Home Loan as a First-Time Buyer

Owning a home for the first time is an exciting opportunity, but it is one you need to approach wisely. Because this is a significant financial decision, you’ll want to learn how to get approved for a home loan that’s affordable for you and your situation.

One survey shows that the median home price for first time homebuyers in the United States is $182,500. These buyers had a median down payment of 6 percent and were 32 years old, on average. With so much at stake, you want to be sure you’re buying the right home with the best loan available to you.

If you’re ready to start the home loan process, TwinCity Lending is available to help you. Contact us now for a free home loan quote.

Home Loan

Are You Financially Ready to Buy a Home?

At the heart of the process of getting approved for a home loan is understanding your overall financial health. Your lending specialist can help you with this process. But it’s best to have a clear picture of your finances already before you begin house hunting.

  • How much money can you commit to each month for a mortgage payment?
  • Are you prepared for increased costs for utilities and maintenance?
  • Have you factored in mortgage and homeowners insurance?

It’s always wise to know your credit score, too. Work to improve your score by using debt wisely and keeping the amount low. All of this helps you to show lenders you’re a good credit risk. 

What Type of Loan Programs Can Help You Qualify?

There are ways for first-time buyers to get approved for a home loan. Several mortgage programs can help support those efforts. Take a look at some options that may fit your goals.

FHA Loans

One of the most commonly used home loans for first-time homebuyers is the FHA loan. Approved lenders, such as TwinCity Lending, can help you qualify for a home loan through this federally-backed program. There are a number of benefits:

  • Lower down payment requirements – You’ll typically need just 3.5 percent of the purchase price in a down payment to secure a loan.
  • Lower closing costs – These fees are less than in conventional loans, reducing how much cash you need to close.
  • Lower credit score requirements – FHA loans can result in approval for some people even with a score of just 580.

VA Loans

Home Loan

VA loans are much like FHA loans in the benefits they offer. The difference is the U.S. Department of Veterans Affairs backs these loans for current or former members of the U.S. Armed Forces. TwinCity Lending can also help you secure these loans. VA loans typically offer:

  • No down payment requirement for most borrowers
  • Low credit score requirements
  • Lower closing costs

If you believe you would qualify for these loans, be sure to speak to your lending specialist about the options. Many borrowers will find this is an excellent way to secure a mortgage as a first-time buyer.

Tips to Help You Secure a Home Loan as a First-Time Buyer

When you meet with a mortgage broker, he or she can provide you with step-by-step information about how to get approved for a home loan. Use these tips to make the process smoother by being prepared:

#1: Seek Pre-Approval Before Looking for a Home

Bring your proof of identity, income, and expenses with you to your loan consultation. This is an opportunity to gain pre-approval, telling you how much you are likely to qualify for a home loan. If you have any concerns about qualifying, be sure to speak to your mortgage specialist about this.

This step is essential in helping you determine a budget for your house hunt. Your broker will be able to give you a good picture of the full financial commitment. Having pre-approval also gives you much better odds of a seller accepting your offer. When a seller sees that a potential buyer already has lending pre-approval, they are much more likely to agree to your offer. This piece is especially critical in hot markets.

#2: Work with a Real Estate Agent to Find the Ideal Home

While your loan is in initial processing, it’s time to find a real estate agent to be on your team. With any home loan, the property will need to pass a full inspection. Your real estate agent will be able to help you find a house that is perfect for you.

If you hope to buy a home that’s a fixer-upper, be sure to talk to your loan specialist about this opportunity. There are options available, such as a 203(k) home loan, that may help with this approval process.

#3: Answer the Underwriter’s Questions

Home Loan

During this time, you will also need to provide proof of income or verify information about the debt you already carry. You may need to provide tax returns and references to your lender, too. The sooner you respond and submit the requested information, the better. If you drag your feet in providing information or signing documents, the home loan process will take a long time.

#4: Bid on Your Home and Close Your Loan

Once you find your desired home and enter into contract, you can then move forward with the loan closing process. Closing on your home means you sign the contract for your mortgage and finalize the purchase. Be prepared that you may need to provide additional information or verify data right up until closing time.

The good news is that your lending specialist will work with you to make the entire process of getting a loan as easy as possible. Your mortgage broker is an expert in all the details. 

TwinCity Lending Is Your Premier Minneapolis Mortgage Broker

Work with our team at TwinCity Lending to learn how to get approved for your home loan. We typically can close on your home loan within two weeks of an accepted offer, as long as all documentation arrives promptly. Reach out today to get started on your first home purchase. 

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