First Time Home Buyers Guide

The process of buying a home for the first time is a huge, and often frightening step. The terminology is unfamiliar, while the process can seem never-ending, especially when it comes to securing a mortgage. To help demystify the process, we will examine what you need to consider before you buy and what you can expect from the loan process.


Who Is a First-Time Homebuyer?

The U.S. Department of Housing and Urban Development (HUD), defines a first-time homebuyer is someone who meets any of the following conditions:

  • An individual who has not owned a principal residence for three years. A spouse is also considered a first-time buyer if he or she meets the above criteria. If either of you meet this criteria, you can purchase a residence together as first-time homebuyers.
  • A single parent who previously owned a home with a former spouse while married
  • A displaced homemaker who has only owned a home with a spouse
  • An individual who has only owned a property not in compliance with building codes and cannot be brought into compliance for less than the cost of construction

Considerations Before You Buy

Determine what your long-term goals are and how owning a home will fit in. Here are five questions to ask yourself:

What type of home best suits your needs?

What specific features will your ideal home have?

How much mortgage do you qualify for?

How much home can you actually afford?

Do you have serious savings?


Before you start shopping, it's important to get an idea of your financial situation to determine if you can get a mortgage from a lender. You may think you can afford a $300,000 home, but may only be good for $200,000 depending on factors like how much other debt you have, your monthly income and how long you've been at your current job.


You’ll also want to look at the total cost of the home, not just the mortgage payments and how much down payment you can afford. Determine if you will need to make major repairs too.


You’ll need money for a down payment and money for closing costs. Make sure you have the funds to cover these costs and that you can access them easily.


Programs to Help You Buy Your First Home

A number of programs are in place to help first-time homebuyers qualify more easily for a home loan.  Following are some from which you can choose.



This is the go-to program for many first-time homebuyers and those who have less-than-perfect credit. The Federal Housing Administration guarantees a portion of the loans, allowing borrowers to qualify more easily. FHA loans have up-front and ongoing additional cost, namely mortgage insurance premiums, which protect the lender in case of default.



The U.S. Department of Veterans affairs helps current military, veterans and surviving spouses buy homes. This program is especially generous, often requiring no down payment or mortgage insurance.



Surprisingly, the U.S. Department of Agriculture has a homebuyers’ assistance program. The program is available in rural areas and allows100%financing by offering lenders mortgage guarantees.


Energy Efficient Mortgage Program

This program extends borrowing power when you buy a home with energy-saving improvements or upgrade a home’s green features. If you qualify for a home load, you can add this benefit to a regular mortgage. The program allows the lender to extend loan limits for energy efficiency improvements.


HUD 203(k) Loans

These special FHA-backed loans from the U.S. Department of Housing and Urban Development are designed for buyers who want to tackle a fixer-upper. The program considers what the value of the property will be after improvements and allows you to borrow the funds to complete the project as part of your main mortgage.


Good Neighbor Next Door

This initiative is a HUD-sponsored program that allows 50% discounts on the list price of homes located in revitalization areas. You must commit to living in the property for at least 36 months.


Assistance From the State of Colorado

Even more assistance is available from resources in Colorado. Click here to see a list of programs.


Common Questions Asked by First-Time Homebuyers


What are mortgage points?

Some homebuyers get lower payments by paying a percentage of interest up front. Buying points can lower your interest rate and monthly payments. Typically, one point equals 1% of your total loan amount.


What is APR?

The Annual Percentage Rate helps you compare payments and total cost between mortgage offers.


How does my credit score affect my mortgage rate?

Good payment habits and a low debt-to-income ratio can result in a lower mortgage rate. If you credit score isn’t where you want it to be, work on your financial habits to improve it over time.


What is debt-to-income ratio?

Your debt-to-income ratio is all your monthly debt payments divided by your gross monthly income. It’s the prime way lenders measure your ability to management the payments you make each month to repay the money you have borrowed.


What is the difference between prequalification and pre-approval?

Both show that you are a serious buyer. The first gets you started, while the second makes it official.


What documents are necessary for the mortgage process?

Get organized as soon as possible. The home-buying process requires you to prove how much money you earn, where you have lived, monthly debts and savings and investment account balances. 



Scott Bakay

NMLS: 1177247
Phone: 303-501-6687

Fairway Independent Mortgage Corporation

8480 E. Orchard Rd #2100
Greenwood Village, Colorado 80111
Phone: 720-500-1871
eFax: 866-526-2397
Fairway Independent Mortgage Corporation (NMLS# 2289)
Complaints may be directed to:
(877) 699-0353 or Email us: