First-time and returning buyers
Your first home
This path takes you from "what can I afford?" to getting the keys, in the order you will need each step.
Steps
- How much house can you afford?Your debt-to-income ratio compares monthly debts with income, and each loan type sets its own line. Your own budget should come first.
- Where your credit standsYour credit score sets which loans fit and what they cost. VA and USDA set no minimum score, and small changes can move you into better pricing.
- How much you need savedSaving for a home means cash for three things: the down payment, closing costs and a cushion. VA and USDA loans need no down payment at all.
- Finding the money for a homeMoney for a home can come from everyday extras, a savings account that earns interest, gifts and assistance. VA and USDA loans need no down payment.
- Are you a first-time buyer?A first-time buyer usually means no home owned in the past 3 years. It allows 3% down on a conventional loan and can require a homebuyer class.
- The four main loan typesConventional, FHA, VA and USDA loans differ in down payment, mortgage insurance and credit. If you qualify for VA, it is often the best of the four.
- Down payment assistance: what it really costsDown payment assistance is often a loan with a second lien, not a grant, and the mortgage that comes with it may cost more. Compare the full cost first.
- Getting pre-approvedA mortgage pre-approval means a lender has checked your credit, income and assets. It backs your offer, but it is not a loan commitment.
- Reading a Loan EstimateThe Loan Estimate is the same three-page form at every lender. Check the loan type, term, amount and rate lock first, then the costs on page 2.
- Agents, offers and contingenciesYou now sign a buyer agreement before an agent tours homes with you. In your offer, earnest money and contingency deadlines decide when you can cancel.
- Inspections, and what to do with themA general inspection is the starting point. In Southwest Colorado, add tests for radon, wells, septic and wildfire risk, then use the results to negotiate.
- Appraisals and low valuesA home appraisal confirms the value supports your price, and your loan is based on the lower of the two. A low value still leaves you options.
- Cash to close, explainedCash to close is your down payment, closing costs and prepaids, minus your deposit and any credits. Confirm wire instructions by phone before you send it.
- Between approval and fundingA mortgage approval is not final until the loan funds. Keep your job, credit and money steady, and confirm wire instructions by phone first.
- At the end: see it with your own numbersDaniel builds your Mortgage Plan: every option that fits, side by side, with your payment, cash to close and cost over time.