First Time Home Buyer Mortgage Loan Programs with Hunter Lending

Buying your first home can be an exciting if daunting prospect.  While you’re certainly ready to stop paying rent and start building equity, you may be understandably nervous about taking out your first mortgage loan.  The good news is, there are several mortgage options to explore, and the experts at Hunter Lending are happy to help you choose the best Denver mortgage options for your particular needs and preferences.

To start, you’ll want to consider the most common loans available to first-time buyers, including conventional loans, FHA loans, and VA loans.  What are these loan types?  How are they different and who can benefit from them?

Getting Started

In the past Denver mortgage options were limited to 30 year fixed mortgages with 20% down. Today there are many different loan programs to choose from along with options to put less than 20% down on the purchase of your home.

There are several factors to determine which program is best for you, however based on how long you plan to stay in your home and your risk tolerance, there are opportunities that can save you hundreds of dollars on your monthly payments.

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Loans We Offer at Hunter Lending

Conventional Home Loans

Conventional mortgage loans are so called because they are the most common type. They are issued by lenders that assess your creditworthiness, down payment, debt-to-income ratio, and other factors to determine how much money you can borrow for the purchase of a home. Conventional loans are not backed by the federal government.

There are two main options to explore when it comes to conventional loans: fixed-rate and adjustable rate mortgages (ARMs). The option you choose may depend on several factors. For example, if you plan to purchase and stay in a home for the foreseeable future, say 10 years or more, your best bet is probably to go with a standard, 30-year fixed loan. 

There are also shorter terms available if you can afford the payments (say, 15- or 20-year fixed).

Many first time buyers are wary of ARMs, but they may actually be preferable for those who don’t intend to stay in a home long, such as young couples looking to grow their family, or buyers interested in a fixer-upper opportunity that can be upgraded and sold at higher value within a few years.  There are plenty of options for ARMs designed for buyers interested in staying in a property for just 1-3 years, up to 7-10 years, for example.

The major benefit of ARMs is that they typically feature lower interest rates and down payments to start, and if rates go down, homeowners will benefit.  However, there’s always the possibility that rates could increase, resulting in higher payments over time.  Before choosing this loan type, it’s best to have a solid plan and understand potential outcomes.

FHA Loans

The U.S. Department of Urban Development oversees the Federal Housing Administration (FHA), which offers a variety of loan programs suited to many first-time home buyers.  These federally-backed loans are offered by FHA-approved lenders and tend to deliver incredible value for buyers who qualify.

They typically require a lower down payment, perhaps as low as 3.5%, although borrowers will have to pay for mortgage insurance to offset added risk.  They also feature lower interest rates, and are less restrictive in terms of creditworthiness.  For example, buyers with less-than-ideal credit scores may still qualify for FHA loans, whereas they might be denied loan approval or subjected to incredibly high interest rates for conventional loans.

VA Loans

VA loans are backed by the Department of Veterans Affairs (VA) and are issued by qualified lenders.  They are available to military veterans and National Guard and Reserve members who meet minimum active-duty service requirements, as well as those discharged for reasons like hardship, certain disability, or reduction of force, for example.

Veterans who qualify for VA loans often receive more favorable terms than conventional loans, including lower rates and fewer restrictions for eligibility, in terms of creditworthiness.  In some cases, VA loans require no down payment.

Jumbo Loans

If the home you’re buying is more expensive than the limit for conventional mortgages, you’ll need a jumbo mortgage. Because they’re larger loans, most jumbo loans require a larger down payment, usually around 25 to 30 percent. Homebuyers also need to have high credit scores, typically over 740 and will be required to show proof of 6 to 12 months of income. Finally, mortgage rates on jumbo loans tend to be higher, although depending on the lender, you can still get a competitive rate.

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Advantages of a First Time Home Buyer Loan

Today, first time home buyers may face a number of challenges when it comes to purchasing property, not the least of which is soaring student loan debt among younger buyers. The good news is, the right first time buyer programs may alleviate some common roadblocks to buying for those who lack ideal credit or find themselves saddled with a challenging debt-to-income ratio.

FHA loans can be a great option for first time buyers who qualify. While conventional loans require a high credit score and low debt-to-income ratio to qualify, and only offer the lowest rates to the best candidates, FHA loans can be had with a credit score as low as 500. That said, credit scores ranging from 500-579 will require a down payment of 10%, while buyers with credit scores of 580+ could qualify with as little as 3.5% down.

VA loans are limited to service members and the application process can be lengthy, but you could end up with a loan even if you lack a down payment or an ideal credit rating.

What to Consider before Choosing a First Time Home Buyer Loan Denver

Before you seek loan approval, there are several things you need to think about, mainly how much you can afford to pay. It doesn’t matter how much you’re approved for – you have to be comfortable paying your monthly mortgage, in addition to utilities and extra costs like homeowners insurance, property tax, and possibly mortgage insurance, depending on the loan. Consider how the size of your down payment impacts monthly expenses, as well.

Make sure to check your credit before applying for loans so you can address any errors and ensure the best opportunity to qualify. Take the time to research first time loan programs offered by Hunter Lending to ensure you find the most favorable options. Finally, don’t start house hunting until you’re approved for a loan. This often leads to disappointment if you aren’t approved for a suitable loan, or if payments prove too high for you to manage.

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In Addition to these standard loan programs we offer a large number of specialized loans to fit your needs.