YourWayLoan

First-Time Homebuyer Guide

YourWayLoan

First-Time Homebuyer Guide

Welcome to YourWayLoan!

Buying your first home is a huge milestone, and we’re here to make it as easy and stress-free as possible. This guide will break down everything you need to know, from getting pre-approved to saving for a down payment and understanding loan options. Let’s get started!

Make Your First Home Purchase Easy & Stress-Free!

Navigate the homebuying process with confidence—from getting pre-approved to choosing the right loan option and saving for your down payment.

STEP 1:

Start with Pre-Approval

Before you start house-hunting, get pre-approved. There’s no cost for this and it’ll save you a lot of stress later on.  This shows sellers you’re serious and gives you a clear idea of what you can afford.

How to Get Pre-Approved:

Know your budget.

Stand out to sellers.

Speed up the buying process.

How to Get Pre-Approved:

1.

Gather your documents: Pay stubs, tax returns, bank statements, and ID.

2.

Check your credit score (more on that below).

3.

Apply here.

STEP 2:

Understanding Your Credit
Score and Credit Reports

Your credit score plays a big role in determining your loan options and interest rate. A higher score can save you thousands over the life of your loan.

What Is a Credit Score?

It’s a number (300-850) that tells lenders how reliable you are at paying back money. It’s based on:

Payment history (Are your bills paid on time?)

Credit usage (How much of your credit limit are you using?)

Length of credit history (How long have you had credit?)

How to Check Your Credit Report:

Visit AnnualCreditReport.com to get a free report.

Review for errors (like incorrect accounts or late payments).

Dispute any mistakes with the credit bureau.

How to Check Your Credit Report:

Pay bills on time (set reminders if needed).

Keep credit card balances below 30% of your limit.

Don’t open too many new accounts at once.

If you’re struggling, ask about our credit education program for personalized help.

If you’re worried about your credit, don’t sweat it. Our Encompass Lending Consumer Credit Education Program can help you rebuild your credit and get on track for homeownership.

Worried About Your Credit? We’ve Got You Covered!

Our Encompass Lending Consumer Credit Education Program can help you improve your credit and get mortgage-ready.

STEP 3:

Saving for a Down Payment

Saving for a down payment can feel overwhelming, but there are ways to make it manageable:

How Much Do You Need?

Most loans require 3%-20% of the home price.

Some programs, like USDA and VA loans, require no down payment.

Saving Strategies:

Set up automatic savings from your paycheck.

Cut back on extras (like subscriptions or eating out) and put that money toward your goal.

Use gift funds from family (some loans allow this); ask your loan officer how to best structure a gift.

Look into employer assistance programs.

Minimize Costs with Seller Concessions:

Ask the seller to cover some or all of your closing costs during negotiations. This can save you thousands upfront!

STEP 4:

Loan Programs for First-Time Buyers

There are lots of loan options out there. Here are the basics:

FHA Loans

Who It’s For:
Buyers with moderate to good credit scores and a low down payment.

Requirements:
– Credit score of 580+ for 3.5% down (or 500+ with 10% down).
– Primary residence only.

Perks:
Low down payment and more flexible credit requirements. Interest rates can be very competitive on FHA loans.

Conventional:

Fannie Mae and Freddie Mac (HomeReady)

Who It’s For:
Buyers with stable income and moderate credit.

Perks:
– Down payments as low as 3%.
– Reduced mortgage insurance costs.

VA Loans

Who It’s For:
Active-duty military, veterans, and eligible spouses.

Perks:
– No down payment.
– No private mortgage insurance (PMI).
– Competitive interest rates (better than conventional loans in most cases)

USDA Loans

Who It’s For:
Buyers in eligible rural areas.

Perks:
– No down payment.
– Competitive interest rates.

Requirements: Income limits apply based on household size and location.

Find the Best Loan Program for Your Needs!

Not sure which loan program fits your situation? We’ll help you compare FHA, VA, USDA, and conventional loans to find the best option.

STEP 5:

Explore Local Grants

Some states and local governments offer grants for first-time homebuyers. These can help cover your down payment or closing costs.

Pros:

Reduces upfront costs.

Some grants don’t need to be repaid.

Cons:

May require you to live in the home for a set number of years.

Often have income or purchase price limits.

Are limited and may not have funds available.

Ask our YourWayLoan team about grant programs available in your area.

STEP 6:

Hometown Heroes Programs

If you’re a military member, police officer, teacher, or medical professional, you may qualify for special programs that help with closing costs or down payments. These programs are a way to say thank you for your service and support.

STEP 7:

Private Mortgage Insurance (PMI):

Mortgage insurance protects the lender if you stop making payments. Here’s how it works:

Private Mortgage Insurance (PMI):

Required for conventional loans with less than 20% down.

Can be canceled once you reach 20% equity.

FHA Mortgage Insurance:

Required for all FHA loans.

Includes an upfront premium and annual premiums.

Can’t be canceled unless you refinance to a conventional loan.

Take the Next Step Toward Homeownership!

Whether you’re ready to apply or need help finding the right loan, our experts are here to guide you.

At YourWayLoan, we’re here to help you every step of the way. Whether you’re just starting out or need guidance on specific programs, our team has your back. Let’s work together to get you into your first home!