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As a first time home buyer (or repeat buyer), the homes available to you depend on how much mortgage you qualify for. First time home buyers can use any of the mortgage programs available, provided they’re financially eligible. That includes conventional loans, FHA loans, USDA loans, and VA loans. First-time buyers might also have access to special loans, grants, and homebuyer courses that offer savings on down payments and closing costs.
Availability of these programs depends on where you live, and there may be special requirements to qualify.
Most loan programs require a credit score of 620 or higher to buy a house for the first time. That includes conventional loans, most VA loans, and USDA loans (which require 640+). For those with lower credit, it may be possible to get an FHA loan with a score as low as 500, and a 10% down payment. But not all FHA lenders allow scores that low, so shop around.
As a general piece of advice, a higher credit score gets you a lower mortgage rate and a bigger home buying budget. Credit scores in the “excellent” range (720+) have access to pretty much any loan program and better rates. So if it’s at all possible to improve your credit score before you apply for a mortgage and buy a home, it’s worth it to do so.
If you’re buying your first-ever home, you’re a “first-time homebuyer” by default. But a repeat buyer can also qualify as a first-time homebuyer, as long as they have not owned a home in the past three years. The three-year mark can help previous home buyers who have come on hard times get back into a home, with access to first-time buyer programs — like the Conventional 97 loan with 3% down — and some down payment assistance grants that are geared toward first-time buyers.
Many popular first-time home buyer programs have no income limit. For example, buyers can qualify for an FHA loan with 3.5% down, or a VA loan with zero down, at any income level. But some first-time homebuyer programs do impose maximum income caps. To qualify for a zero-down USDA loan, your income can’t exceed 15% above the local median. Similarly, many downpayment assistance grants set caps based on the local median income.
To get a First-time home buyer grant, you’ll have to look into local programs. These grants are typically offered by state and local governments and nonprofits, so they vary by area. To qualify, you generally need to be a first-time homebuyer with low-to-moderate income. And you need to make sure the mortgage program you’re applying for allows you to use the funds toward your down payment and/or closing costs.
If you want to know whether you’re ready to buy a house, ask yourself four questions:
1) Do I have a steady job and a reliable income?
2) Do I have enough money saved for the down payment AND closing costs?
3) Is my credit history reasonably strong?
4) Do I plan to stay in the home for at least five years?
There’s a lot more to each of these questions, of course, but the answers should give you a general feel for your home buying readiness.
The easiest way to find out if you’re eligible to buy a home right now is to check if you’re eligible for financing.
You can get started below. Getting verified by a lender is free, and it only takes a few minutes to begin.