St. Louis Mortgage Help

Just How Hard Is It For a First Time Home Buyer To Get a Mortgage?

September 26th, 2011 2:40 PM by Bob Rutledge

So you are a First Time Home Buyer or at least you are considering buying a new home. You have heard that you can own a new home for less than what you would be paying rent on a comparable place. You want to own because you want a place to call your own, you hate the neighbors in the apartment next to you, your landlord never responds, you want to change the color of your walls, your apartment is just way too small. Whatever your reason for looking to own your first home, this is a great time to be considering making the move!

The 2 Big Worries of Most First Time Home Buyers: Getting Approved and Money to Close

By now we have all heard that it is harder now to get a new mortgage than ever before. That you have to have a 20% down payment. That lenders are saying NO, that banks aren't lending, and that home sales are way down and foreclosures are way up. Well, some of this is true and a lot is false.

Before the sub-prime lending market fell apart it was very easy for nearly anyone to get a new home loan, it was too easy. I recall a loan program where if you had a 580 credit score, your debt to income ratio was at 50% or less, you didn't need a down payment and you were at least one day removed from your Bankruptcy discharge then you were qualified to buy a new home.  Ironically, except for the one day out of Bankruptcy I can still get many first time home buyers a mortgage through FHA financing who have these qualifications.

Not everyone can qualify for a new mortgage, some who want to own their own home just have not earned the ability to have a lender provide them the funds to buy. But, is it impossible for MOST home buyers to get a mortgage to purchase a new home...NO!

There are 3 basic loan programs to work very well with first time home buyers, USDA, VA and FHA. USDA is a great 100% financing program for low to moderate income home buyers who want to own a home outside of urban areas. The VA mortgage program is for Veterans and those serving our country in the Armed Forces, another great 100% financing program. But, the number 1 loan program for owning your first home is the FHA mortgage.

FHA Mortgage Qualification for First Time Home Buyers

Since every lender has their own rules or overlays to getting an FHA approval, I will only speak about what I can do. FHA has their own guidelines that every lender has to abide by, but many overlay these rules with their own guidelines that make getting approved a bit more tedious. At USA Mortgage we have the ability to approve your mortgage straight from the FHA underwriting manual, this makes getting your new home much easier.

We want a minimum of a 580 middle credit score of your 3 available scores, this 580 score doesn't mean an automatic approval it is just the number we need to get you to the starting line. An underwriter will take careful consideration of your credit history to determine if you have the WILLINGNESS to pay your credit obligations. Are you paying your credit obligations on time and as agreed then you have a very good chance of being credit approved. Truly, it is that simple.

Next we will look at your ABILITY to pay your obligations, this is a simple ratio test. We will take your monthly gross income and compare it to your potential new house payment and most if not all of the credit obligations we find on your credit report. If you fall at or around the debt to income ratio guideline then you are income qualified. The debt ratio for contained within the FHA guidelines is 31% for your new house payment and 43% for your total debt to income ratio. These guidelines are NOT absolutes, I have received approvals with total debt to income ratios as high as 50%.

Getting approved for a new home loan especially for first time home buyers who utilize the FHA mortgage programs will find that it is not overly difficult. I usually have an answer for you within the course of a day, many times much faster. Would you like to have a professional evaluation of your ability to qualifying for a new home loan? Please, feel free to contact me. If I can't get you approved for a new mortgage today, we will set a plan in motion that will get you there. If you want to learn more visit or

I Don't Have The Money Saved For a Down Payment

This is the second concern of many First Time Home Buyers, mostly because they keep hearing that it takes a 20% down payment to get a mortgage approval. BALONEY! The minimum down payment for FHA is 3.5% of the sales price, USDA and VA has no minimum down payment requirements.

There are many places for a first time home buyer to come up with the required down payment for an FHA mortgage, in fact in the FHA underwriting guidelines they mention 24 different resources a first time home buyer can use for down payment. When I first visit with a potential home buyer we go over that list and they are amazed at the fact that they did have the down payment available to them.

But, keep your money in your pocket. There are many groups that provide down payment assistance to first time home buyers, the State of Missouri has a nice program, Florissant, Wentzville, St. Peters, St. Charles, O'Fallon, Dardenne Prairie, Weldon Springs, St. Paul are just a few of the cities around the St. Louis area that offer down payment assistance, Then there is St. Louis County, St. Charles County and Jefferson County that has down payment programs too. Funds available for down payment help can range from 3% of the loan amount with MHDC or from $3,000 to as high as $10,00o from the local government agencies. If you want some help with down payment assistance programs and qualifying for these programs please feel free to contact me or visit

Getting a New Home With Little To No Money Out of Pocket

Now you know there are mortgage programs for first time home buyers that don't require a down payment, that there are programs that provide down payment help but what about the remaining costs to getting a new home. Besides the down payment there are costs that are referred to as closing costs. In today's housing marketing it is not unusal to have the seller of your next new home pay for your closing costs, this is considered standard and acceptable. With FHA in many instances the seller can pay up to 6% of your closing costs.

As a lender I can help pay your closing costs too, for nearly all my first time home buyers I have been paying for the cost of the appraisal and waiving all lender closings costs. This has helped with keeping your money in your pocket as well as making it much easier to negotiate with the sellers as they are not giving up that money from the sale of their home. If you would like to learn more about this special first time home buyer program visit

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Posted by Bob Rutledge on September 26th, 2011 2:40 PM


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