State Financial Network’s First Time Home Buyer Program:
- At least one borrower must be a first-time home buyer
- Minimum of one borrower must receive home-ownership education prior to settlement
- Designed for eligible borrowers at or below 100% of area median income (AMI)
- Flexible credit standards if you have a limited credit history or a less-than-perfect credit score
- No area median income restrictions for some loan programs
For help identifying income and property eligibility, use Freddie Mac’s Home Possible® Income and Property Eligibility Tool.
A Guide to Understanding the Process
Where do I begin?
Common questions include:
- What amount am I comfortable paying each month? Determine your budget. Calculate your financial situation, including your income, expenses, savings, and debt. This will help you determine how much you can afford to spend on a house.
- How much money do I have for a down payment? Save as much as possible for a down payment, typically ranging from 5-20% of the home’s purchase price or as little as 3% for some loan programs. The higher the down payment, the lower your mortgage payments will be.
- How much money do I want in reserve after purchasing my home? In addition to the down payment and monthly mortgage payments, factor in other costs like property taxes, insurance, maintenance, and utilities when budgeting for homeownership.
A crucial step in qualifying for a mortgage is to be pre-approved. State Financial Network, your trusted financial resource, is here to work side-by-side with you to complete your home buying journey. Let us teach, guide and smooth out your path to home ownership.
What does pre-approval mean?
We review your credit history and income. With this information, we can provide a solid idea of the loan amount you qualify for, making it easier to choose the perfect home. What do I need to obtain a mortgage pre-approval?
- 30 days of paystubs
- 2 years of W-2’s
- Bank statements
- 2 years of tax returns, if self-employed
During the process, one of State Financial Network’s Loan Officers will obtain your credit report, and process your application through an automated underwriting system. Together, you will decide the best loan program for you. Your pre-approval includes a purchase price and loan amount. When you choose a home your real estate agent can include your pre-approval with your offer to buy the home.
Try our Mortgage Qualifier Calculator before you go through the pre-approval process. This calculator helps provide you approximately how much you can borrow.
Credit Bureau Report and Credit Score
A credit report and credit score provide information on credit use in the past, including whether bills are paid on time. There are three credit reporting agencies in the United States: Experian, Equifax, and Transunion. Each of these credit reporting agencies compiles credit information from various reporting sources into a credit report. When a borrower applies for credit lenders normally review a credit report to help make a lending decision and to determine interest rates and lending terms. A credit score is a number that helps lenders predict how likely a person is to pay back the money they borrow. A credit report is updated frequently, as new information is reported by lenders and older information is gradually removed per federal retention requirements. However, it’s important to also know that most lenders report changes in account status, such as payments on a monthly basis. If you make a payment on an account, it’s possible that the payment won’t appear on a credit report for up to 30 days. Recommendations:
- Review your credit report periodically. You can do this for free without impacting your credit report or credit score at Annualcreditreport.com.
- Read how you can build better credit. This guide is provided by Freddie Mac.
Down Payment
We can help you realize the milestone of homeownership faster without the barrier of a 20% down payment. Saving a 20% down payment to get a mortgage is daunting – and it’s a myth that you need this much cash to buy a home. A range of low-down-payment mortgages and down payment assistance programs can unlock homeownership for people who lack substantial savings but can afford monthly house payments. Down payments can be as low as 3%. No minimum funds may be required from the buyer. The down payment can be from a gift or other eligible sources. With a low down payment, mortgage insurance will be required, which increases the cost of the loan and will increase your monthly payment. Remember, saving for a home purchase takes time and effort, but it’s worth it in the end.
Tips on Saving for a Down Payment
- Keep saving. Even after you’ve saved for your down payment and closing costs, it’s important to keep saving for unexpected expenses and future investments in your home.
- Create a budget. Review your income and expenses to determine how much you can realistically save each month. Make sure to account for all expenses including bills, groceries, transportation, etc. and cut back on any unnecessary expenses.
- Open a dedicated savings account. Open a high-yield savings account dedicated to your home purchase and regularly contribute to it. This can help you keep track of your progress and prevent you from dipping into your savings for other expenses.
- Automate your savings. Consider setting up automatic transfers to your dedicated savings account. This way, you can ensure that you are saving a consistent amount each month without even thinking about it.
Additional Information
This Freddie Mac Step-by-Step Mortgage Guide leads you on the path to home ownership from application to closing. Pull the curtain back and learn the steps to take for home ownership.