How to Get a First-Time Homeowner's Loan
For first-time homeowners, getting a loan can be intimidating. A house is often the biggest investment in someone's life, but with a little planning, you can probably get the loan you need. The federal government has several programs to help first-time home buyers, and they can be very useful in getting a loan.
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Instructions
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Avoid getting too much house at too high a cost. Make sure the mortgage payments are manageable. Generally, one should avoid mortgages that would require a monthly payment that is more than 28% of gross monthly income.
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Remember the tax credit. Until June 2010, the federal government is offering a $8,000 tax credit for first-time home buyers. This can significantly affect the affordability of a home, especially a starter home. The credit is receivable at the time of the closing and can reduce the balance of the mortgage.
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Research Federal Housing Administration offerings. FHA loans allow the down payment to be as low as 3%. Also, there are FHA programs for fixer-upper houses and for certain types of professions (such as teachers or firemen) that may be useful to first-time home buyers. These programs are not very well known. Check the FHA website for program descriptions (see Resources).
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Collect your financial records. A bank generally will expect to see W2 forms for the past two months and income tax returns for the past two years. Moreover, the bank will want to see documentation of existing debts, your total amounts in savings and investments, and the amount available for the down payment.
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