So you want to buy your first home, huh? Congratulations! You're taking a big step that will help you achieve the dream of many people and make money for yourself. As a first-time home buyer, you should know that there are a number of programmes that can help you get the house you want at a mortgage rate you can afford. Before you start looking for your first home, make sure you know about these programmes and work with your mortgage lender to use them.
The Federal Housing Administration is the best place for people buying their first home (FHA). They work by giving insurance (guarantees) to private mortgage lenders against the loan you get from them. They make owning a home possible for many people who don't have perfect credit or enough money to pay the large down payment that is sometimes needed to buy a home. You should know that they are not there to help you buy a home you can't afford. Instead, they are there to help you buy a home you can afford by giving you guarantees and help right away. It is up to you to make sure that you don't buy a home that you can't pay for over the life of the mortgage note. Don't take on more debt than you can pay back.
The steps to get an FHA loan are pretty much the same as the steps to get a regular mortgage. You'll have to show proof of your income from the last three years, but what counts as income is a bit more flexible. Under the FHA programme, you can count things like Social Security, alimony, rent paid by other family members, and so on as income. Short-term debt doesn't count against you, either (short-term is defined as being able to be paid off in less than 10 months).
You can spend up to 29% of your total income on housing costs, and you can spend up to 41% on housing costs and other long-term debt obligations. Again, it's up to the homeowner to make sure they can afford the home they want to buy. Even if the FHA loosens the rules, that doesn't mean you should buy a home that will be hard to pay for every month.
Through the FHA, they will help you get started on buying the house of your dreams, but keep in mind that it is a team effort. Even if this isn't your first time buying a home, you should still shop around at different mortgage lenders and try to get the best rates you can.
About the FHA programmes, there is a lot of information out there. Your mortgage lender should be able to tell you a lot about the process and help you through it. You can learn more about it at www.fha.gov.
In addition to the FHA, you may also be able to get help from state and local programmes to cover some of the costs of buying your first home. Ask your lender if there are any programmes like this.
