Remember We Don't Just Promise... We Deliver!

Welcome - First-Time Homebuyer

Looking for First Time Home Buyer Information? Our Experts Can Help!

Apply Now

Thinking of buying a new home? We’re here to help.

Buying your first home can be exciting and overwhelming all at the same time – which is why we have a variety of tools and resources to help you through the experience. Whether you’re just starting to save or you already have a house in mind, we can help you get your keys to your first home.

Click here to Prequalify Now! and our experts will contact you immediately to find you the best loan that fits your need or Book Appointment

We tell our clients to just keep this abbreviation in their mind.

Credit

These 3 things will help you qualify for a loan immediately.

Your credit score is a very important consideration when you’re buying a house, because it shows your history of how you’ve handled debt. And having a good credit score to buy a house makes the entire process easier and more affordable – the higher your credit score, the lower mortgage interest rate you’ll qualify for.

Click here to take a deep dive in and look at the credit score (below info is very relevant for the first time home buyer to read. We can make a box it will be so easy for them to understand)you’ll need to buy a house, which loan types are best for certain credit ranges and how to boost your credit.

See What You Qualify For
Credit Score Needed To Buy A House (By Loan Type)

Your credit score is a number that ranges from 300 to 850, and that number is used to indicate your creditworthiness. The higher your score, the more lenders will want to work with you. Though higher credit scores are considered more favorable for lenders, it’s still possible to get a mortgage with less-than-ideal credit. It all depends on the type of loan you’re applying for. Conventional and government-backed loans have different credit score requirements.

Conventional Loan Requirements

Conventional loans aren’t guaranteed or backed by a government program. They’re best suited to borrowers that have higher credit scores and money saved up for a down payment. It’s recommended you have a credit score of 620 or higher when you apply for a conventional loan. If your score is below 620, lenders either won’t be able to approve your loan or may be required to offer you a higher interest rate, which can result in higher monthly payments.

FHA Loan Requirements

If you have a lower credit score or don’t have much cash socked away for a down payment, you might consider an FHA loan, which is insured by the Federal Housing Administration. The minimum credit score for an FHA loan is usually 580. However, having a higher credit score may still help you qualify for a better FHA mortgage rate.

VA Loan Requirements

A government-backed VA loan might be an option for you if you’re a veteran or qualified servicemember or spouse. There’s no industry-set minimum credit score to buy a house, but Dream Home Mortgage requires a credit score of at least 580 for a VA loan.

USDA Loan Requirements

You could look into a government-backed USDA loan if you plan to live in a qualified rural or suburban area and have an income that falls below 115% of the area’s median income. Most lenders require a minimum credit score of 640 for USDA loans. Dream Home Mortgage does not offer USDA loans at this time.

Understanding Your Credit Score

Once you have a basic understanding of what credit score is needed for each type of loan, it’s time to take your own score into consideration. That means looking at your credit report. Your credit report is an essential part of understanding your credit score, as it details your credit history. Any mistake on this report could lower your score, so you should get in the habit of checking your credit report at least once a year and report any errors to the credit reporting agency as soon as you find them. You’re entitled to a free credit report from all three major credit reporting agencies once a year.

If you’d like to check your credit score, Dream Home Homes℠, a sister company to Dream Home Mortgage, can help. Dream Home Homes helps you track and understand your credit profile. Dream Home Homes allows you to view your TransUnion® credit report, which is conveniently updated every 7 days to ensure you get the most up-to-date information, as well as your VantageScore® 3.0 credit score. Once you know your score, you can assess your options for a conventional or government-backed loan – and, when you’re ready, apply for a mortgage.

FICO® Score Vs. Credit Score

The three national credit reporting agencies – Equifax®, Experian™ and TransUnion® – collect information from lenders, banks and other companies and compile that information to formulate your credit score.

There are lots of ways to calculate a credit score, but the most sophisticated, well-known scoring models are the FICO® Score and VantageScore® models. Many lenders look at your FICO® Score, developed by the Fair Isaac Corporation. VantageScore® 3.0 uses a scoring range that matches the FICO® model.

The following factors are taken into consideration to build your score:

  • Whether you make payments on time
  • How you use your credit
  • Length of your credit history
  • Your new credit accounts
  • Types of credit you use

Income

Your lender wants to be sure that you maintain steady employment. Lenders often ask for 2 years of proof of income The steadiness of your income could affect the interest rate you’re offered. When reviewing all lenders check your income and your monthly liabilities/debts

Debt-To-Income Ratio

Debt-to-income ratio, or DTI, is the percentage of your gross monthly income that goes toward paying off debt. Again, having less debt in relation to your income makes you less risky to the lender, which means you’re able to safely borrow more on your mortgage.

To find your DTI, divide the amount of recurring debt (credit cards, student loans, car payments, etc.) you have by your monthly income. Here’s an example:

If your debt is $1,000 per month and your monthly income is $3,000, your DTI is $1,000 / $3,000 = 0.33, or 33%.

It’s to your advantage to aim for a DTI of 50% or lower; the lower your DTI, the better chance you have at being offered a lower interest rate.

Loan-To-Value Ratio

The loan-to-value ratio (LTV), is also used by lenders to assess their risk in lending to you. It’s the loan amount divided by the house purchase price.

To find your DTI, divide the amount of recurring debt (credit cards, student loans, car payments, etc.) you have by your monthly income. Here’s an example:

For example, let’s say you buy a home for $150,000 and take out a mortgage loan for $120,000. Your LTV would be 80%. As you pay off more of your loan, your LTV decreases. A higher LTV is riskier for your lender because it means your loan covers a majority of the home’s cost.

LTV decreases when your down payment increases. Going off the example we’ve just used, if you get a mortgage of $110,000 instead because you put down $40,000 ($10,000 more than before), your LTV is now 0.73, or 73%.

Different lenders accept different LTV ranges, but it’s best if your ratio is 80% or less. If your LTV is greater than 80%, you may be required to pay a form of mortgage insurance . Keep in mind that this varies by loan type and some loans, like VA loans, may allow you to finance the full purchase price of the house without you having to pay mortgage insurance.

Down Payment

Our down payment plays an important role when you're buying a home. A down payment is a percentage of your home's purchase price that you pay up front when you close your home loan. Lenders often look at the down payment amount as your investment in the home.

Homebuyers

What Is a Down Payment?

A down payment is a sum a buyer pays upfront when purchasing an expensive good such as a home or car. It represents a percentage of the total purchase price, and the balance is usually financed. A down payment can significantly reduce the amount the borrower owes to the lender, the amount of interest they will pay over the life of the loan, and monthly payment amounts.

Get A Quote
Homebuyers
<

How Down Payments Work

Buyers commonly pay a down payment when purchasing a home. The average first-time home buyer pays 6% of the home price as their down payment and takes out a mortgage from a bank or other financial institution for the remainder.

Get A Quote

Types of Down Payments

Home Purchases

In the United States, a 20% down payment on a home has been the standard. Because a buyer's credit score, income level, and debt-to-income ratio help determine a loan's interest rate, borrowed amount, and terms of the mortgage, a larger down payment can be beneficial.

For 2023, the minimum down payment is 3% for conventional home loans per rules set by government-sponsored entities Fannie Mae and Freddie Mac. For FHA loans that help low- to moderate-income families attain homeownership, the minimum down payment is 3.5%. The lowest down payment requirements commonly carry income limits

Other Considerations When Buying A House

First Time Home Buyers can also benefit with Down Payment Assistance program.

Decide how long you plan to stay in this home.

Down payment assistance can get downright costly if you only plan to own the home for a short time. In Texas DPA programs we researched usually require you to repay a portion of the DPA if you sell your home within three to nine years of buying it.

Benefit to Buyers by applying with us:

  • We qualify first time home buyers with minimum down payment programs
  • We prequalify quickly and send you the pre approvals same day or within few hours as we have inhouse realtors team and understand in this business "time is of an assence" . We send the pre approvals so you can quickly submit an offer and get your Offer Accepted! Click here to prequalify now tab Now!
  • We offer first time home buyers down payment assistance grants up to $14,000.00 (some restrictions apply*** different states have different requirement- call for further information)
  • Our experienced realtors negotiate for the buyers and get them the lowest prices in the best of location and neighborhood. (some restrictions apply)
  • We offer cash back rewards to buyers to assist them in paying closing costs.
  • It’s a win win situation!!!
whatsapp