Frequently Asked Questions

Check out the issues first time buyers face when purchasing a home and find answers to your challenges on the road to homeownership.
I don't know how to buy a house and don't know where to start?
Problem: Tina has been thinking about buying a house but she is overwhelmed by the process and needs advice on where to begin and what to do.

Solution: Diane needs to fill out the short pre-approval application and a team member from the FirstHomeBuyers team will contact her to discuss the diferent programs she may be eligible for and what steps she needs to take to become a homeowner.
I have good credit and income but no money for down payment and closing costs
Problem: Mark is a fireman and found a home he likes but doesn't have any money to buy it.

Solution: Mark can Apply For Down Payment Assistance and may be able to get funds to pay for down payment and closing costs. Also, the seller and/or lender can give you a credit toward closing costs.
I am pre-approved for a firsthomebuyers program. What is the next step?
Problem: Dana got pre-approved for 3% down HomeReady with down payment assistance and she is excited about becoming a homeowner. She want to start looking at homes and she wants to know the next steps to buying a home.

Solution: Today's real estate market is very competitive and Dana needs a good Realtor to assist her with the purchase of her first home. We can find you a real estate agent in our network and all you need to do is fill out the Perfect Home Finder form. A Realtor will send her current active property listins of homes on market. Next, her Realtor will set up showings to see homes. Finally, when she finds a home she loves her agent will put in an offer on it and hopefully, she will get it accepted by the seller.
My credit is good but my wife has terrible credit
Problem: Tom has a 680 credit score but his wife Joanne has bad credit with a 492 credit score. Tom makes $35,000 per year and Joanne makes $30,000. They want to apply for an FHA loan and they are trying to purchase a $200,000 home in Chicago, Illinois.

Solution: They will not be able to qualify for a $200,000 home because both credit scores need to be 550+. Tom may apply for a loan on his own but will only qualify for a much lesser priced home. They may not be able to find any homes in this price range so Joanne may need to work on improving her credit and they can purchase a home within a year.
I have no credit
Problem: Tammy has no credit history or credit scores with 2 medical collections on her credit report.

Solution: Unfortunately, you need some credit history these days to get a home loan. She will need at least 1 credit score and she will need to build up a credit history with 2 accounts with a minimum history of 12 months to qualify for the first time home buyer program. She can get a few secured Visa or Master cards which report to the credit bureaus. I would like to note that many first home buyers think bad credit is no credit but that is not true. No credit means no credit history whatsoever, good or bad. Tammy should pay off the medical collections as soon as possible so time will pass before she applies for a mortgage. If Tammy pays offs the collections and establishes 2 credit accounts with a perfect 12 month history then she should qualify for a loan within 1 year.
I am tired of my job and just started a new business
Problem: Bob has worked as an accountant for 10 years and now he has just opened up a new consulting business in the last six months

Solution: Bob will not qualify for our loan program right now. His business needs to be operating for 2 years and he will need 2 year's tax returns before underwriting will use his business income to qualify for a loan and they will average his income for the last 2 year's which can't be declining from one year to the next. For example, if Bob wants to purchase a $200,000 home and he shows gross income of $75,000 in 2010 and $50,000 in 2011 but he reports $32,000 net income for 2010 and $15,000 net income for 2011 then he will probably not qualify for a $200,000 home loan. His income is not high enough to qualify for a $200,000 and it is declining the last couple of years. Bob needs to show increasing or stable NET income which is sufficient to qualify for the home he wants to purchase.
I just graduated from college and I have a ton of student loan debt
Problem: Betty just graduated from Florida State University and she has $100,000 of student loans.

Solution: Betty does not need a 2 year work history to qualify for the first time home buyer program if she just graduated from school. She just needs to have a job and we will need a copy of her diploma. One of the biggest challenges for first home buyers are student loans. Betty has a huge balance on her student loans which are deferred for less than 1 year and they have not been consolidated into one loan yet. Underwriting will pick up a payment even though they are not due for awhile and her debt ratio may be too high. Betty needs to consolidate her student loans into one low payment on a longer term or apply for an income based repayment plan to make it easier for her to qualify for a home loan.
I have just paid off old collections but my credit scores went down?
Problem: Frank decided to do the right thing and he paid off some old medical collections but his middle credit score went from 680 to 587. What the ##$%^! happened?

Solution: Frank should not have paid off the old collections unless he was several months to one year from purchasing a home. When you pay off old collections, the credit bureaus look at this as a recent derogatory event and the scores can drop significantly. Only time will heal the scores and he should have consulted a loan officer first. He possibly should have left the collections alone, applied for the home loan because he had the credit score to qualify and underwriting would have approved the loan subject to the collections being paid off prior to closing. You want to pay off collections as close to closing as possible because the lender may run another report a day before closing and the collections being paid off will not factor into the scoring because it usually takes 30 days or so for the bureaus to update your credit report. Also, some loans, such as FHA, may not require you to pay off medical collections.
I just got a new base salary plus commission job
Problem: Mary was earning $80,000 per year as a sales manager for XYZ company but she just started a new job in sales for Make The Sale Company with a $40,000 plus commissions which are expected to be $60,000 or more for the first year which brings her projected total 1st year income to be $100,000 or more.

Solution: Underwriting will only pick up the base pay and Mary will need to show 2 years of commissions before the lender will pick up the income. Mary should have bought her new home prior to the job change and she would have known this earlier if she would have contacted a lender and submitted an online pre-approval application.
I am buying my first home from my mother but I don't have any money
Problem: Debbie is buying a home from her mother but she has zero down payment. The home will appraise for $120,000 and her mother is willing to sell it to her for $110,000.

Solution: Debbie may qualify for the FHA Gift of Equity Program which means you can use the equity or $10,000 for down payment and closing costs and she may not have to bring any money to closing. This program only works if you are purchasing a home from a family member who lives in the home or you are renting the home for 6 months or more.
I don't make enough money to qualify for the loan but my father will co-sign for me.
Problem: David just got a new job out of college but he doesn't qualify for the home he wants. His fiancé Patricia has bad credit but good income to help pay the mortgage payment. David was turned down by his local bank because he doesn't make enough income to qualify on his own even though Patricia will be contributing to the payment. He told his father Nick about the situation and he agreed to be a co-signer on the loan.

Solution: David's father can be the co-borrower with FHA Loan Program and help David qualify for the program. Nick does not have to occupy the property and David can refinance the loan into his and possibly Patricia's name in a year or two to get dad off the mortgage. Important note: If David's dad has a mortgage then the payment will be counted in the qualifying ratios so their combined income has to be good enough to help carry the new mortgage as well as his dad's existing mortgage.
I have changed jobs in the last 2 years but I always get a lot of overtime
Problem: Alicia is an accountant and she has worked for 3 different companies in the last 2 years and she did have one employment gap for 3 months while looking for her current job. Also, she has been working a lot of overtime on all 3 jobs but she has been on her current job for only 2 months.

Solution: Frequent job changes may be okay but underwriting will look at the stability of your income. For example, Alicia was getting overtime on her previous jobs and she expects to get a lot of overtime on her new job but underwriting will probably only use her base pay to qualify and not count the overtime income until she has been on her current job for 2 years. Today, lenders have really tightened their guidelines so you need to contact FirstHomeBuyers to discuss the qualifications for the program.
I want to buy a fixer upper but it needs some work
Problem: Linda and Andrew want to buy a foreclosure home but it needs new appliances, windows, carpeting, and painting.

Solution:They can apply for an FHA 203k rehab loan which includes up to $35,000 of repairs. The repairs would be done after they close on the home and the contractors would be paid after completion of the work. The program requires a low down payment and the seller may be able to pay for most or all of the closing costs.
I live in a rural area and I don't have any money for a down payment
Problem: John lives in Small Town, USA and he is tired of throwing away money on rent. He has decent credit with a score of 650 and a stable job as a mechanic for the last 3 years. The problem is that he has no money for down payment and cloisng costs. He just wants to purchase a modest house for his wife and kids and a place he can call home.

Solution: John is in luck! He may be eligible for the USDA Guaranteed Rural Development Program which requires zero down payment and the seller can pay for the closing costs. The loan has a 30 year fixed rate and the minimum score for the program is only 600.
I have a Chapter 7 Bankruptcy which was discharged 3 years ago and I don't think I will qualify for a loan
Problem: Pamela had a Chapter 7 Bankruptcy which was discharged 4 years ago and her current credit score is 690. She has 2 secured visa cards, one unsecured credit card, and a car loan which she has been making on-time payments for the last 2.5 years with no other issues on her credit report.

Solution: Pamela should qualify for the FHA or the USDA zero down loan program which requires a 640 credit score. A Chapter 7 Bankruptcy must be discharged for a minimum of 2 years for FHA loan and 3 years for USDA loan and you should establish 4 accounts with a minimum of 12 months on-time payment history.
I want to buy a fixer upper but it needs some work
Problem: Linda and Andrew want to buy a foreclosure home but it needs new appliances, windows, carpeting, and painting.

Solution: They can apply for an FHA 203k rehab loan which includes up to $35,000 of repairs. The repairs would be done after they close on the home and the contractors would be paid after completion of the work. The program requires a low down payment and the seller may be able to pay for most or all of the closing costs.
I don't know what price range I should be looking in?
Problem: Lauren has been looking at homes online and she doesn't know how much home she can afford.

Solution: Check out the home affordability caclulator to find out your maximum loan payment and house you can afford.