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First Time Homebuyer Information

First Time Homebuyer Information Team
UpdatedDec 1, 2010
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    2 min read
Key Takeaways:
  • Read our homebuyer's guide
  • Consider if FHA loans are right for you
  • Find a great realtor

Loan Options for a First Time Home Buyer

Why buy a home? Why not carry on renting? This is a question we cover in more detail on our rent vs. buy page, but the quick answer is that for many, a home is both an investment and a place that they can make their own. As an investment, there are tax advantages - you can deduct the interest on up to $1.1 million of mortgage loans from your income on your annual tax return.

Assuming you've weighed the benefits and decided that home buying is for you, now what? Our home buying guide covers details applicable to all home purchasers, but what considerations apply especially to first-time home buyers?

Government Loans

First-time home buyers have often not had the time or the opportunity to accumulate large down payments. While conventional loans often require you to put down as much as 10-20% of a home's value, loans insured by the Federal Housing administration (so-called FHA loans) may require as little as a 3.5% down payment. FHA loans are available on manufactured and mobile homes as well. You can reach out to's network of lenders for help with FHA loans.

Buying a fixer-upper

First-time home buyers often manage to get into a larger home than they could otherwise afford by buying a fixer-upper - perhaps an old home with remodeling work required in order to turn it into that dream home. Here again, FHA loans, in this case the 203(k) program, can help. Eligible borrowers, should they meet all the requirements, can borrow up to 110% of the value of a home after necessary improvements have been made.

Work with a good real estate agent

For your first home, perhaps more than at any other time, it is vital to find a great realtor to work with. The right real estate agent will help you find homes that you can afford and that meet your needs; a bad realtor will show you homes that they want you to buy, regardless of whether they are in your price range or meet your requirements.


TTim, Nov, 2011
Many great opportunities out there for first time home buyers. I locked in a great rate and made money buying a home. Check out this service Sundaybell. My agent gave me a rebate! But to be honest, it was because my wife and I did all the property tours ourselves and only used the agent for negotiations....but hey, the money came in handy!
AAdriaan, Mar, 2011
My wife and I are a so called husband and wife team and share the same job as resident managers for a self storage facility. We applied for a FHA loan and have difficulty to get it approved.My wife broke her arm and has been operated on and was put on workers comp for 5 months.She is back to work and fully reinstated with her previous salary.Employer and doctor have verified her income and a complete return to work.Problem is that underwriter does not approve her months of income from workers compas a earning and there for she did not make the required level of income for 2010 but with her reinstated salary and predicted income for 2011 we will make all the bells and whistles.My wife did not loose her job or has been laid of as a result of that injury.Is the underwriter correct in declining us because my wife broke her arm and that we now have to wait a year? Seems like my wife gets punished twice for an act of GOD.
BBill, Mar, 2011
The underwriting process at mortgage originators is secret. The underwriting standards each originator uses follows Fannie Mae guidelines if the originator wishes to sell the loan to Fannie Mae or Freddie Mac, which is where 60% of all recent loans have landed. However, the guidelines are just that — guidelines. Therefore, if the underwriter at your mortgage originator is interpreting the guidelines in a cockamamie manner, you can either appeal the denial to the underwriter's supervisor, or take your business elsewhere.
aanand, Dec, 2010
i am going to by a home first time so we are so much happy with that