FIRST-TIME HOME BUYER GUIDE - PROGRAMS, GRANTS, AND MORE


By bblouin
A first time home buyer couple holding a set of house keys.

Homeownership is a major goal for many Americans and the military community has unique opportunities and obstacles in making this dream a reality. Being a first-time home buyer can help you qualify for assistance, but you will also be facing a complex process without experience. Buying your first home doesn’t have to be intimidating; our guide will help you find the resources you need, avoid the pitfalls, and will assist you with purchasing your first property.

What Is a First-Time Home Buyer?

To be a first-time home buyer, you must meet specific criteria, including not having owned a home within three years. You must be purchasing your primary residence. Those who meet the criteria of their state will qualify for assistance through first-time home buyer programs offered at both state and federal levels. Anyone who qualifies for such assistance is going to find compensation to help cover closing costs, special benefits that provide lower down payments, exclusive incentives, special grants, etc. Furthermore, the IRS can also allow first-time home buyers the ability to withdraw from retirement savings to help fund their purchases. You may also find that there are additional programs that are not only available to first-time buyers but may also help you fund your home.

Are You Considered a First-Time Home Buyer After 3 Years?

While this may vary depending on your state or the program you are applying for, first-time home buyers may be able to reapply for assistance even if they received help before provided they meet the criteria and haven’t owned a home in three years or more.

How to Qualify for First-Time Home Buyer Grants as a Veteran

Simply put, if you’re looking for a Veteran first-time home buyer grant or program, qualifying may vary because there are so many different options available. The main point of qualification as a first-time home buyer is going to be that it’s your first purchase or that you haven’t owned property within a certain timeframe, as mentioned above, most commonly within three years. As far as Veterans and active duty military members, you’re going to have to qualify as someone who either served or is serving in the American Armed Forces. Generally, you’re going to need to have a certain amount of time served and avoid a dishonorable discharge to qualify for a VA home loan or first-time home buyer program. Research is important and can save you thousands of dollars. Be sure to check with a real estate agent about available grants and programs in your state along with federal resources you may qualify for.

How to Buy a Home for the First Time

If you’re an active duty member or Veteran first-time home buyer, understanding the process of purchasing a home is important. Here’s how to purchase your first home:

Get Your Pre-Approval Letter

The first step to homeownership is understanding how much home you can afford. This is going to be important not only for fiscal responsibility but also because unless you have a pre-approval letter, you’ll find it difficult or impossible to view properties from serious sellers. A pre-approval letter isn’t a guarantee but it does provide confidence from a lender that you qualify for a loan capable of purchasing a home within a certain price range. With that being said, it’s important to remember that you might qualify for a certain amount but choosing a home that maximizes your pre-approved amount may fall through if your financial situation changes or the information you provide isn’t accurate. Furthermore, purchasing the highest-priced home you can may also lead to financial hardships down the road. It’s best to set a budget for your home that is realistic, affordable, and accounts for the ups and downs life may bring.

Hire a Real Estate Agent

Having a real estate agent is critical for purchasing a home, but especially for first-time home buyers. Realtors are capable of providing you with expert advice but also create a professional buffer between you and the seller that can help with managing stressful situations. Furthermore, real estate agents are a resource for both the expected and unexpected situations such transactions can present. Best of all, real estate agents cost you nothing as a buyer. That’s right, generally speaking, real estate agents have a fee covered by the seller, not the buyer.

Focus More on Needs, Not Wants

For first-time home buyers, it’s important to keep their eyes on the prize. This is an effort easier said than done and helped made possible with the right real estate agent. However, it’s easy for anyone to get wrapped up in aesthetics or things that may be wanted in a property but not necessarily needed. It’s all about sticking to a budget and having the discipline to ensure your first home purchase provides you with a home that has features you need that aren’t sacrificed for potential wants. Remember, renovations and upgrades can be added to your home down the line. Be sure to focus on the important features for your family to avoid buyer’s remorse.

Make An Offer

Once you have decided on the right property, and have communicated this to your real estate agent, it’s time to make an offer. Every first-time home buyer Veteran should know that the offer you provide is going to vary depending on the local market. For example, if you are trying to purchase a home in a competitive market, be prepared to pay the list price if not more if you want to be truly considered. On the other hand, more stagnant markets may provide you with some room to negotiate the price down. These options should be discussed with your agent.

Get a Home Inspection (Every Time)

There are plenty of horror stories of home purchases going wrong because of seemingly quality homes having hidden problems that only show themselves when it’s too late. A home inspection can help you mitigate this risk by having a professional check out the structural integrity of your potential home. This can alert you to any issues that may be lurking. Once you purchase a home it’s your responsibility but an inspection can help you find problems. Be sure to have them fixed before the transaction is complete. You may also have an opportunity to back out of the sale if the inspection isn’t to your liking. Even if the home is a new construction, first-time home buyers should be aware of the risks that come with skipping a home inspection and always opt for them.

Close and Purchase Home Insurance

The final step is going through the closing process. Usually, this is about a month to a month and a half process that makes sure everything is up to par with you as a buyer and your finances. Especially for your first time, you’re going to need to lean on your real estate agent heavily during this period and follow their lead. Communication is key. It’s critical that you don’t do anything to affect your credit score and especially avoid making large purchases or losing any source of income during this time. If you do, the entire process can fall apart. You won’t receive the home, and at this point, you’re likely going to have lost hundreds if not thousands of dollars. Speaking of money, don’t forget about closing costs, which can be between 2% and 6% of your total loan amount. This is one reason why Veteran first-time home buyer programs are so important for the military community as they can help you cut some of these expenses. Even VA loans have funding fees which range from 1.25% to 2.15% for first-time buyers. Additionally, as a condition of your loan, home insurance is likely required. Even if it’s not, you’re going to want to purchase coverage to avoid having to restore any major losses, such as a house fire, that could destroy your property. Be sure to speak with your real estate agent and home insurance agent about your risks and purchase the right policy. You may also need to add additional coverage, such as flood insurance, depending on your risk tolerance and where your property is located.

How to Find a Realtor as a Veteran First-Time Home Buyer

Before you qualify for a Veteran first-time home buyer tax credit or find the home of your dreams, hiring a real estate agent is essential for a successful purchase. Remember, hiring a real estate agent is free and they can help you handle the stress, overcome obstacles, and find first-time home buyer Veteran grants and programs that help you save. But not all real estate agents are the same. You’re going to need to find the right professional for the job. Purchasing a home is a big decision and may come with stress. Here’s how to find the right professional to help you become a homeowner:

Interview Multiple Real Estate Agents

When you’re ready to buy a home you’re going to want to interview a few possible real estate agents before signing up. Make the decision on who you feel is right for your family to ensure fewer headaches and a smooth purchase. One notable pitfall for first-time home buyers is simply hiring a friend or family member to do the job; however, this can be detrimental to your deal and your relationship. Interviewing multiple candidates is always a good idea. If you do hire someone you know be sure that both your family and your loved one are capable of keeping business and personal lives completely separated.

Hire a VA-Savvy Real Estate Agent

The ideal real estate agent is going to know about first-time home buyer Veteran programs, VA home loans, and the unique needs of military families. Everyone is different. While the VA loan is often the best option for military families, it doesn’t hurt to compare all of your options available. Dealing with the VA and understanding how the loan limits work, fees, debt-to-income requirements, etc., are all necessary for a successful purchase. The right real estate agent is going to help guide Veteran first-time home buyers in the direction they need to go and remain a knowledgeable resource every step of the way.

Ask Fellow Veterans for Referrals

Keeping in mind the previous two steps, it doesn’t hurt to ask those within the military community for referrals of agents who have helped them in the past. In some cases, you’re going to find some Vets who recommended a friend or family member. However, you can find out whether or not they are right during the interview step. The goal here is to find a professional with the skills and experience to get the job done. They should also have a track record of handling transactions for the military community.

Tips for Veterans Purchasing Their First Home

If you are a Veteran first-time home buyer, it’s important to remember that every experience is different. Thus, advice should come from a licensed real estate professional. Always double-check with your real estate agent before making any decisions. This includes asking about the following tips we hope help you on your journey:

Combine VA Home Loans and First-Time Home Buyers Programs

First-time Veteran home buyer grants and programs are helpful but are made more powerful when combined with VA loans. Furthermore, while you don’t need a down payment for a VA loan, putting one can help you save money. Assistance programs are available that help you save on these closing costs and more. Determine which loan and program works best for you with your real estate agent. Then, look for opportunities to combine their benefits for maximum effect.

Compare Lenders

When you compare lenders, you’re saving money on your interest rate by finding the lowest one. You can also find someone who has deals for the military community and save on closing costs too.

Build Strong Credit

Your credit score will affect how much money you are approved for when applying for a home loan. Having a higher credit score keeps more money in your pocket and provides more options for your family.

Do: Maintain Employment

While getting laid off may be beyond your control, if you have a job or multiple streams of income, be sure to maintain them until you have finished closing on your home. Remember, closing is a process to check your financial status. You’re going to need to avoid doing anything that makes lenders question your finances in any way. This includes switching jobs. A career change may be the right move for you but not when you’re buying a home.

Don’t: Make Large Purchases

The last thing anyone wants is to have a deal fall apart because of a controllable variable. There are several things that can wreck a home purchase. Buying expensive things, such as a vehicle, is one of them. Avoid major purchases until after you are officially a homeowner and the deal is complete.

Does Co-Signing Affect First-Time Home Buyers?

Having someone cosign your home loan can be good or bad and involves considerations from both parties. Cosigning can affect their ability to utilize first-time home-buying programs in the future. And, every party’s debt-to-income is going to be considered. What this means is if you have a cosigner that doesn’t have a good ratio, you may actually hinder your chances. Generally, a 43% DTI ratio is the highest you can expect to be approved for. Lenders prefer 36% and between 28% to 35% contributing to the mortgage itself. For VA loans a 41% DTI ratio is the high mark. Each Veteran first-time home buyer should consider if a cosigner is best for their needs. Related reads:

Sources:

  1. Buying a Home, HUD. Accessed July 2024. https://www.hud.gov/topics/buying_a_home
  2. The 5 Biggest Mistakes Veteran and Military Home Buyers Make, Realtor. Accessed July 2024. https://www.realtor.com/advice/buy/veteran-buyer-mistakes/
  3. Debt-to-Income (DTI) Ratio: What’s Good and How to Calculate It, Investopedia. Accessed July 2024. https://www.investopedia.com/terms/d/dti.asp
  4. Debt-To-Income Ratio: Does it Make Any Difference to VA Loans?, VA News. Accessed July 2024. https://news.va.gov/6371/debt-to-income-ratio-does-it-make-any-difference-to-va-loans/

CONNECT WITH US
VeteranLife Logo

©2024 VeteranLife. All rights reserved.