Apply for a Home Loan as a First-Time Buyer: What You Need to Know

Q: Should I apply now or wait for rates to drop?

That depends on your goals. You can apply now, lock your rate, or set a free alert to monitor rates daily.

Q: How long does the process take?

Pre-approval can take as little as 15 minutes. The full loan process typically takes 2–4 weeks, depending on the file.

Q: Can I buy a home with student loans?

Yes. As long as your monthly payments fit within your DTI limits, you can still qualify for a mortgage.

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First time home buyers

Apply for a Home Loan First-Time Buyer: What You Need to Know

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1. What Does “First-Time Homebuyer” Really Mean?

2. The Process of Applying for a Home Loan as a First-Time Buyer

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

4. FAQ

If you're applying for a home loan first-time buyer, it's totally normal to feel unsure of where to start.

You're not just picking a house—you’re also figuring out credit scores, down payments, interest rates, and loan programs you've never heard of before.

Don’t worry. This guide will walk you through exactly how to apply for a home loan as a first-time buyer, what documents you need, which programs to consider, and what mistakes to avoid.

What Does “First-Time Homebuyer” Really Mean?

You’re considered a first-time buyer if:

You’ve never owned a home, or
You haven’t owned a home in the last 3 years

This status may qualify you for special benefits like low down payments, lower interest rates, and down payment assistance programs (DPA).

The Process of Applying for a Home Loan as a First-Time Buyer

Let’s break it down in 6 clear steps:

1. Check Your Credit and Budget

Before applying for a home loan, review your:

Credit score (620+ preferred; FHA allows as low as 580)
Monthly income vs. debts (your DTI, or debt-to-income ratio)
Savings for down payment and closing costs

Tip: You don’t need 20% down! Many first-time buyer programs require just 3% down—or even 0% for VA and USDA loans.

2. Get Pre-Approved (Not Just Pre-Qualified)

A pre-approval letter shows sellers you're serious—and gives you a clear idea of what you can afford.

You'll typically need to upload:

Proof of income (pay stubs or 1099s)
W-2s or tax returns
Bank statements
Government-issued ID

At Loan Factory, our AI-powered app makes this process quick, secure, and fully online.

3. Compare Your Loan Options

Here are loan types commonly used by first-time buyers:

Loan Type	Down Payment	Credit Needed	Best For
FHA Loan	3.5%	580+	Lower credit / limited savings
Conventional 97	3%	620+	Solid credit, first-time buyer
VA Loan	0%	Flexible	Military or veterans
USDA Loan	0%	640+	Rural or semi-rural homebuyers
DPA Programs	Varies	Varies	Local/state assistance with down pay

Loan Factory automatically checks eligibility across 240+ lenders and dozens of local programs.

4. Understand the Costs

When applying for a home loan as a first-time buyer, be prepared for:

Cost Type	Approximate Amount
Down Payment	0%–5% of home price (loan-dependent)
Closing Costs	2%–5% of loan amount
Escrow / Prepaids	Insurance, taxes (1–3 months upfront)

Avoid lenders that charge application or junk fees. At Loan Factory, we never charge those unnecessary extras.

5. Learn the Language of Mortgages

Here’s a quick glossary of what you’ll hear during the process:

APR: Your interest rate + fees
DTI: Debt-to-income ratio
PMI: Private mortgage insurance (usually required if <20% down)
Underwriting: Review process where your loan gets final approval
Rate Lock: Freezes your interest rate for a set time (protects you from market shifts)

Don’t stress—we explain every step and term along the way.

6. Apply With a Lender Who Specializes in First-Time Buyers

Choosing the right partner is key. At Loan Factory, we help first-time buyers by:

Matching you with the best loan options across 240+ wholesale lenders
Giving you a local loan advisor for hands-on guidance
Offering a fully online application with instant rate comparisons
Never charging application or origination fees
Delivering peace of mind with 13,000+ five-star Google reviews
Read real reviews here