Apply for a Home Loan as a First-Time Buyer: Step-by-Step Guide

Category

1. Step 1: Understand the Mortgage Process

2. Step 2: Check Your Financial Readiness

3. Step 3: Get Pre-Approved, Not Just Pre-Qualified

4. Step 4: Understand the Real Costs of Buying a Home

5. Step 5: Learn the Mortgage Lingo

6. Should I Work with a Broker or Bank?

7. Why First-Time Buyers Trust Loan Factory

8. What Happens After I Apply?

9. Ready to Apply for a Home Loan First-Time Buyer?

Apply for a Home Loan as a First-Time Buyer: Step-by-Step Guide

If you’re searching “apply for home loan first time buyer” chances are you’re both excited—and a little confused.

You’ve probably heard about credit scores, pre-approvals, down payments, and closing costs. But no one’s really explained how it all fits together, or what to expect as a first-time buyer.

This guide breaks down everything you need to know, in simple terms, so you can move forward with confidence.

Step 1: Understand the Mortgage Process

Here’s the basic flow of getting a home loan:

Check your credit & finances
Get pre-approved by a lender or broker
Find a home and make an offer
Finalize your loan application (full approval)
Close on your loan (sign documents, pay closing costs)
Get the keys to your new home

Don’t worry—we’ll walk you through each step below.

Step 2: Check Your Financial Readiness

Check Your Financial Readiness

Lenders want to know three main things:

What They Check	Why It Matters
Credit Score	Affects your interest rate and loan eligibility
Debt-to-Income Ratio (DTI)	Measures how much of your income goes to monthly debt
Down Payment	Minimum varies by loan type (as low as 3%)

Even with a lower credit score or limited savings, there are loan programs for you—like FHA or Down Payment Assistance (DPA)

Step 3: Get Pre-Approved, Not Just Pre-Qualified

Get Pre-Approved, Not Just Pre-Qualified

Pre-approval = Your budget and buying power.

Unlike a simple pre-qualification (which is just a guess), a pre-approval means a lender has reviewed your documents and conditionally approved you for a specific loan amount.

You’ll usually need to provide:

Pay stubs or proof of income
Tax returns (2 years)
Bank statements
ID and Social Security Number

With Loan Factory, you can apply online and get pre-approved in as little as 15 minutes.

Start your pre-approval now

Step 4: Understand the Real Costs of Buying a Home

Many first-time buyers underestimate how much is due at closing. Here’s a breakdown:

Cost Type	What It Covers	Typical Range
Down Payment	% of home price (3%–20%)	Varies by loan type
Closing Costs	Lender fees, title, appraisal, escrow	~2%–5% of loan amount
Prepaid Expenses	Home insurance, property taxes (escrowed)	1–3 months upfront

At Loan Factory, you’ll never pay application fees or junk fees. Only actual third-party costs are charged at closing.

Step 5: Learn the Mortgage Lingo

Here are some common terms you’ll hear:

Term	What It Means
Lender	The company providing your loan (can be a bank or wholesale lender)
Broker	A licensed professional who shops multiple lenders on your behalf
APR	Annual percentage rate = interest + fees
DTI	Debt-to-income ratio = debt ÷ gross income
Escrow	An account where your taxes and insurance are held
PMI	Private Mortgage Insurance (required if down payment < 20%)
Underwriting	The review process that decides if your loan gets approved