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First Time Homebuyer Loans

You do not need to know every mortgage term to take the first step. We help you understand what payment fits your budget, how much cash you may need, and which loan options to compare so you can plan your first home purchase with confidence.

Explore My Buying Budget

Guidance for homebuyers in Texas, Florida, Minnesota, and Colorado.

Start With a Payment That Fits

What Can You Comfortably Afford?

The loan amount a lender may approve and the payment you want to manage are two different things. Start with a monthly budget that leaves room for everyday life and the savings you want to keep.

What Makes Up Your Monthly Housing Payment?

Principal and interest
Part of each payment reduces your loan balance. The rest pays interest, which is the cost of borrowing. This portion of your payment depends on your loan amount, interest rate, and repayment term.
Property taxes and homeowners insurance
Property taxes are paid to your local government. Homeowners insurance helps cover damage to your home from covered events. These expenses are often collected with your mortgage payment, and increases can raise your monthly payment.
Mortgage insurance, when required
Some loans require mortgage insurance, which protects the lender if you stop making payments. It is different from homeowners insurance. The cost depends on your loan program and other factors, so include it when comparing monthly payments.
Homeowners association or condo dues
Some homes require dues for community maintenance, shared amenities, or building expenses. These charges are usually paid separately from your mortgage. Include them in your budget when comparing homes.

Leave Room for Life After the Purchase

Start with what you spend in a typical month. Along with your housing payment, allow for groceries, utilities, transportation, childcare, debt payments, and regular savings. Leave room for the things you enjoy, too. A home purchase should fit your life rather than force you to rebuild your entire budget around the payment.

Think about expenses that may change when you move. A larger home could mean higher electricity bills, more lawn care, or additional commuting costs. Ask about the home’s utility costs and get a homeowners insurance estimate before settling on a comfortable payment.

Plan for the expenses that do not arrive every month. An appliance may need replacing, the air conditioner may need service, or an unexpected repair could come up. Keeping money available after closing can help you handle those costs without immediately relying on credit cards.

Finally, consider what you want to keep saving toward, whether that is retirement, family goals, or an emergency fund. The loan amount you qualify for is a starting point. Your budget should help you choose a payment you can manage while continuing to work toward those goals.

Plan for More Than the Down Payment

How Much Money Will You Need to Buy?

Separate the money needed to complete the purchase from the savings you want available afterward. A small down payment does not mean there are no other costs.

Your Down Payment

The part of the home’s purchase price you pay rather than borrow. Eligible conventional purchases may allow as little as 3% down, FHA as little as 3.5%, and VA may offer no down payment for eligible borrowers.

Closing Costs and Prepaids

Expenses for getting the mortgage and completing the purchase, such as lender and settlement charges, prepaid interest, and taxes and insurance collected at closing. These are separate from the down payment.

Savings After the Move

Plan for moving expenses, repairs, and unexpected costs. Some loans also require savings remaining after closing. Choose a purchase plan that leaves you comfortable with the money you have available.

What Can Reduce the Amount You Bring to Closing?

Eligible gifts can help with certain purchase expenses. Agreed seller credits may cover eligible closing costs, but cannot replace your required down payment. Deposits already paid toward the purchase are generally credited in the final closing figures. Some expenses, such as an inspection or appraisal, may be paid before closing.

Compare Your Paths to Homeownership

First Time Buyers Have More Than One Loan Option

First time buyer describes your situation, not one specific mortgage. Conventional, FHA, and VA loans have different requirements and costs. Some options are also available to people who have owned a home before.

Conventional Loans

As little as 3% down for eligible purchases

Worth comparing for buyers with documented income and a qualifying credit profile. Mortgage insurance is generally needed below 20% down. Some low down payment options have income limits or homebuyer education requirements.

Explore conventional loans →

FHA Loans

As little as 3.5% down for eligible buyers

May offer flexibility for some credit histories. FHA loans include upfront and ongoing mortgage insurance, so compare the full payment and cash needed alongside the interest rate.

Explore FHA loans →

VA Purchase Loans

No down payment may be available if eligible

For eligible Veterans, service members, and surviving spouses. VA loans do not require monthly mortgage insurance. A funding fee may apply unless you are exempt, and closing costs still need to be considered.

Explore VA purchase loans →

Certain programs use a definition such as no ownership of a primary residence during the previous three years. Eligibility, income limits, and education requirements vary. We can identify which requirements apply to your options.

Get Ready for the Mortgage Review

What Lenders Review and What to Prepare

You can ask questions before you have every document ready. These are the main areas we will help you work through as you prepare to buy.

What Lenders Review

Credit history
Lenders review your credit score, payment history, and outstanding debts. Requirements vary by loan program and lender. A score alone does not determine whether you can buy a home.
Income and monthly debts
Your documented income is compared with the proposed housing payment and obligations such as car loans, student loans, and credit cards. This helps determine the financing you may qualify for.
Money for the purchase
The lender verifies funds for the down payment, closing costs, and any required savings after closing. Eligible gifts and agreed seller credits may help with certain expenses, subject to program requirements.
The home
The property must meet the selected loan program’s requirements. An appraisal or other approved valuation helps establish value. A home inspection is a separate review of condition and does not replace the lender’s property review.

Your Document Starting List

Income records
Recent pay statements and W2s, or records for retirement, self employment, or other income being used to qualify. Additional documents depend on your income sources.
Account statements
Generally, two months of statements for bank and other asset accounts used toward the purchase. Gifts, transfers, and large deposits may need supporting records.
Employment and residence history
Prepare at least two years of employment and residence history, including employer details and previous addresses. This does not mean two years with the same employer or at the same address.
Photo ID and purchase contract
Have a government issued photo ID ready. Provide the signed purchase agreement once you have a home under contract. You can begin the preapproval process before choosing a property.
Self employed? See what to prepare →
Know What Comes Next

Five Steps From Planning to Closing

You do not have to figure out the entire process at once. Here is how the financing fits into your home buying journey.

  1. Set Your Payment and Savings Plan

    Share your goals, timing, and comfortable monthly budget. We can help you estimate cash needed and identify the loan options worth comparing.

  2. Review Your Finances and Get Preapproved

    Provide the application and requested records so credit, income, debts, and assets can be reviewed. Preapproval helps establish a shopping range; final approval still depends on the property and remaining requirements.

  3. Find a Home and Make an Offer

    Work with your real estate agent to find a home and negotiate the purchase contract. Once your offer is accepted, arrange a home inspection to help identify repairs or other concerns within the deadlines in your contract. An inspection reviews the home’s condition and is separate from the lender’s appraisal.

  4. Complete Underwriting and the Home Appraisal

    The lender reviews your income, credit, assets, and the home’s appraisal to confirm the loan meets its requirements. The appraisal helps establish the home’s value. Provide any additional documents requested and work with us to resolve remaining conditions so your loan can receive final approval.

  5. Review Your Closing Disclosure and Close Your Loan

    You will receive a Closing Disclosure at least three business days before closing. It outlines your loan terms, monthly payment, closing costs, and the amount needed to close. We help you review the figures and answer questions before signing. Confirm payment instructions directly with the closing company, provide your closing funds, and sign the documents to complete your purchase.

Common Questions

First Time Homebuyer Questions

Clear answers to help you prepare.

Do I need 20% down to buy my first home?

No. Eligible conventional purchases may allow as little as 3% down, FHA as little as 3.5%, and VA may offer no down payment for eligible borrowers. A smaller down payment can affect mortgage insurance and the monthly cost. Compare the complete payment and cash needed before choosing.

Can I qualify as a first time buyer if I owned a home before?

Possibly. Some programs consider you a first time buyer if you have not owned a primary residence during the previous three years. The exact definition depends on the program. You may also qualify for financing that does not require first time buyer status.

How much money do I need beyond the down payment?

Budget for closing costs, prepaid expenses, moving, and savings for unexpected expenses after the purchase. Money already paid toward the transaction and any applicable credits affect the remaining amount due at closing. We can help estimate these figures for your price range.

Can family help with my down payment?

An eligible gift from an acceptable donor may help with the down payment or closing expenses, depending on the program. The lender generally needs a gift letter and records showing the source and transfer of funds. Talk with us before moving money so you know what to document.

Can I start the mortgage process before finding a home?

Yes, and it is recommended! Reviewing your finances before shopping helps you understand loan options, a potential price range, and cash needed. You can begin the preapproval process without a home under contract and provide the purchase agreement after your offer is accepted.

Does changing jobs mean I have to wait two years to buy?

Not automatically. Lenders review your work and income history, the type of income, and whether it is expected to continue. A job change does not always restart a two year waiting period. Starting a business or changing how you are paid may require a different review.

Is preapproval the same as final loan approval?

No. Preapproval is based on the information reviewed and the conditions stated in the letter. Final approval depends on completing the lender’s requirements, including the property review and updated financial information when needed. Ask what has been verified and what remains outstanding.

How do I choose between FHA and conventional financing?

Compare your actual options using the same purchase price and other assumptions. Look at the full monthly payment, cash needed, lender fees, and mortgage insurance costs. The lowest rate or smallest down payment is only one part of the decision. We can help you compare both before choosing.

Keep Exploring

Tools for Planning Your First Purchase

Mortgage Payment Calculator

Explore how the price, down payment, rate, taxes, and insurance affect your estimated payment.

VA Loan Calculator

Eligible for VA financing? Explore estimated payments and the VA versus conventional comparison.

Home Buying Questions?

Ask about your situation and get help identifying a useful next step.

Your First Home.
A Clear Plan to Get Started.

Understand your options and costs before you commit. Get guidance on the payment, money needed, and steps ahead.

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