What does it mean to be a first-time home buyer when applying for an FHA home loan?
Many borrowers want to know if there is an advantage to applying for an FHA mortgage if they have never borrower money for a home before. What is the reality?
The FHA loan program itself does not give advantages to the first-time home buyer, nor does it penalize someone who has owned a home before. All financially qualified applicants are able to get an FHA loan even if they have purchased a home before.
That does NOT mean first-time home buyers won’t get offered incentives from a participating FHA lender, but those incentives are offered by the lender and not via the FHA home loan program itself.
Borrowers who are first-time home buyers should always ask the lender what incentives that financial institution may offer the new house hunter. And first time home buyers DO have some tools they should use to make their home loan application process easier.
It is also a very good idea to search in your local area for first-time home buyer programs that may offer down payment assistance, credit counseling, or other help.
The FHA itself does not offer these programs with one important exception. You can call the FHA directly at 1-800 CALL FHA and ask for a referral to a local, HUD-approved housing counseling agency that can definitely help a first time home buyer with pre-purchase planning, information on credit requirements for buying a new home, and much more.
Among those tools is a set of online mortgage calculators that can be used to help a first-time home buyer calculate estimated mortgage payments, check loan affordability, and more.
The online mortgage calculator will not give you an exact amount in any case (there are a few variables that you will have to “guesstimate”,) but as an estimate it is quite valuable to help you plan and budget for a new home loan.
Another very important tool for the first-time FHA loan applicant? Pre-approval for an FHA mortgage. By getting pre-approved with a participating lender you can approach your house hunt knowing an approximate price range available to you based on the loan amount you may be pre-approved for.
Maybe you already have your eye on a property you want to purchase and would like to get pre-approved for a home loan so you can make an offer based on the amount you know the lender is willing to discuss with you. Or you may want to know what price ranges to search for before you find the right home for you.
These tools are extremely valuable for the new borrower. When you begin searching for just the right property to buy with an FHA mortgage loan, the better prepared you are the more confidently you can search for a new home.