Life is all about decisions. Whether it be choosing where to eat or which type of belt goes with your shoes, your choice will impact a part of your life. But probably the most life-altering decision you may eventually face is buying a house.
It could be overwhelming at first. However, it is crucial to gain knowledge about the steps and eligibility requirements. By learning and understanding the policy of the lending company, you know what to expect, and it will be easier for you to avoid hassles along the way.
Image Source: https://unsplash.com/photos/rgJ1J8SDEAY
First-time homebuyers need to learn and understand the requirements for buying a house in texas. With that, you know the things you need to avoid, thus making the process of the application easier. In case you have had credit issues, it is advisable to request a copy of your credit report from the agencies.
It is easy to request a copy of a report. Just visit AnnualCreditReport.com. Once you get the report, check if there are errors. If there are mistakes, have them corrected.
The Texas Department of Housing and Community Affairs offers first-time homebuyer programs to help out qualified borrowers. There are also some national loan programs with features that can benefit first-time homebuyers. It’s important to remember that the TDHCA defines a first-time homebuyer as someone who hasn’t owned a home as a primary residence within the past three years. However, this requirement is waived if you’re an honorably discharged veteran.
Image source: https://unsplash.com/photos/xoU52jUVUXA
First-time homebuyers may consider a conventional home loan. It offers 3% down if the mortgage meets requirements set by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. Placing at least 20% down, you won’t have to pay mortgage insurance. Most lenders require a minimum credit score of 620 to be eligible for a conventional mortgage, but a score around 740 would provide the best interest rates. A conventional mortgage is best those looking for a low down payment, as well as limited mortgage insurance premiums.
Mortgages insured by the Federal Housing Administration offer relaxed qualification requirements, most notably when talking about the down payment and credit score. You can be eligible for an FHA home loan with a minimum credit score of 500, but you’ll need a 10% down payment. Scoring 580 or higher slashes the down payment to as low as 3.5%. It’s important to note that FHA loans require mortgage insurance, which can’t be canceled. FHA loans are advisable for those with a low credit score, and those seeking a
low down payment.
This type of loan is best for those with military ties and for those that seek low down payments. This type of loan is guaranteed by the U.S. Department of Veterans Affairs, whereby military members, veterans, and surviving spouses are eligible for mortgages. Qualifying means benefits such as no minimum credit score and no down payment or mortgage insurance. However, there is the likelihood of paying a VA funding fee.
The USDA home loan program encourages rural and suburban homeownership by offering zero-down-payment mortgages to lower-income buyers. Borrowers’ rent, utility payments, or any nontraditional credit data is taken into consideration, but a credit score of 640 or above will speed up the loan processing. These mortgages can be utilized only in certain areas, but being a farmer or rancher isn’t part of the requirements for buying a house in Texas.