First-Time Home Buyer Loans
Achieve your dream of homeownership with affordable first-time homebuyer programs!
Explore Our Home Loan Options
We make the mortgage process easy by working with numerous mortgage lenders, helping you find the right loan for your specific situation.
Your First Home is Closer Than You Think
Homeownership is one of the best ways to develop wealth and security, but it can often feel out of reach for marginalized individuals. For example, Fannie Mae’s recent report found that only 46% of LGBTQ+ people are homeowners, compared to 65% of the general population. Despite this, 83% of LGBTQ+ people state that they would like to own their own home. Bisexual individuals are more likely to be first-time buyers than their peers.
It’s expected that 1.5 million Black households, 775,000 Asian households, and 2.2 million Hispanic households will soon be approaching their first home purchase, helping to boost homeownership numbers for these underrepresented groups. Right now, just 44% of Black Americans own their own property, a number that our team hopes to improve by serving minority communities.
We are strong advocates for anyone who feels left out of the property race, ensuring that you have an equal chance at financing. Pride Lending is here to help eligible homebuyers find the best loan programs for their unique needs, tailoring our services to seek out the most affordable options.
Buying your first home is both exciting and nerve-wracking: down payments, closing costs, and credit score requirements can be confusing. Whether that’s low down-payment mortgages, low-interest loans, or down-payment assistance programs, we’ll demystify the process and help you feel confident with your mortgage loan, ensuring you can take the keys to your brand-new home with pride.
Explore Your First-Time Homebuyer Loan Options
First-time eligible buyers can choose from several loan programs, each with their own strengths. Each of these is offered by private lenders, though government-backed loans, like FHA, VA, and USDA loans, are guaranteed by the federal government, meaning lenders can offer good rates and low down payments for eligible home buyers.
Our loan officers will help you find the first-time homebuyer program that’s right for you based on your financial profile and specific needs; these options can vary by your income, credit history, and property location.
Conventional Loans With Low Down Payment Options
Conventional mortgages can be excellent first-time homebuyer loans for borrowers with a strong credit score, a stable income, and a lower debt-to-income ratio. The majority of LGBTQ+ borrowers use conventional products, with 83% of all LGBTQ+ buyers choosing fixed-rate products.
Mortgage companies provide these loans, which they then sell on the secondary mortgage market to improve liquidity. As they can be packaged and sold, conventional loans are a safer bet for lenders than non-conventional loans.
Many lenders offer a 97% LTV conventional mortgage, which requires only a 3% down payment on your new property. These include Fannie Mae’s HomeReady Loan, as well as Freddie Mac’s Home Possible and HomeOne loans. First-time homebuyers may need to complete a homeowner education course before accessing these mortgage loans.
The Neighborhood Assistance Corporation of America (NACA) also runs a Homebuyer Purchase Program that offers unprecedented benefits, like no down payment, closing costs, private mortgage insurance (PMI), or fees. There’s no credit score requirement, but you will have to undergo a counseling program and provide community service to assist NACA in serving others.
FHA Loans
The FHA loan is one of the most well-known government programs that helps first-time buyers purchase a primary residence. In fact, Federal Housing Administration products have made a significant difference in the racial disparity between first-time homebuyers: over 30% of these loans go to borrowers of color, a significantly higher percentage than for other mortgage products.
The Federal Housing Administration will reimburse a mortgage lender for part of their lost profits should the borrower default, which makes private lenders more willing to borrow to those with a low credit score or annual income. There are no income limits to qualify for these home loans, though they are generally considered a better option for those with poor credit scores.
With an FHA loan, your down payment requirement is determined by your credit score. If you have a score between 500 and 579, you will need to provide a 10% down payment, while those with credit scores of 580 or higher only need to provide 3% down.
Mortgage lenders often offer better interest rates on these products because the federal guarantee reduces their risks.
First-time buyers can also access numerous down payment assistance and closing cost assistance options from their state or local government, which helps to reduce their upfront expenses.
VA Loans
Veterans and active duty service members can utilize a VA loan to purchase a primary residence as a benefit of military service. This mortgage program, backed by the Department of Veterans Affairs, reduces the financial burden of home buying by requiring no down payment.
They are a crucial way for service members of color to become first-time homebuyers, as Black and Latine applicants are half as likely to be rejected for these home loans than for conventional products. As about 6.1% of service members identify as LGBTQ+, which is higher than the general population, VA home loans also represent a significant opportunity to achieve homeownership for LGBTQ+ people.
You can often access a mortgage loan even if you have a lower credit rating than required for a conventional loan, as the VA places no credit score requirement. on lenders; this means you can shop around for one who will lend to you based on your credit score.
VA loans also don’t require PMI; instead, you’ll pay a VA funding fee, which is limited to 3.33% of the home’s purchase price.
Unlike a conventional mortgage or an FHA mortgage, there are no limits to how much you can borrow if this is your first time claiming your VA benefit.
Additionally, the VA provides numerous down payment assistance programs to help veterans, and there are specialized products for disabled or Native American veterans, including loans for adaptive housing.
USDA Loans
Nearly 14 million people who identify as Black, Asian, Hispanic or Latino, Native American, or multiracial live in rural areas; additionally, 3.8 million rural Americans identify as LGBTQ+. We’d like to ensure these borrowers have the funding they need to build a life where they love.
If you want to enjoy the clear skies of a rural area, then USDA loans might be the perfect choice for you. Guaranteed by the US Department of Agriculture, USDA loans are meant to encourage homeownership in rural areas.
These loans are restricted to specific areas of the country, but they provide superior benefits for those who want to buy a homestead away from the city lights. The home must be your primary residence.
This mortgage program is designed to help low-to-moderate-income borrowers who may not be able to access funding otherwise, so there are income limits to qualify. Like conventional mortgages and FHA loans, there are limits to how much you can borrow based on the area's average purchase price. Typically, these are lower than they would be for other loan options.
USDA loans, like VA loans, have no down payment requirement. You also will not have to pay private mortgage insurance, though you may have to pay a mortgage insurance premium as with other government-backed loans.
If you choose a USDA Direct Loan, your interest rate may be as low as 1%, and there are home improvement loans and grants available to further reduce your costs.
First-Time Homebuyer Loan Process
A loan officer from Pride Lending will help you through every step of your home-buying journey, guiding you through the mortgage application and closing process. This is what you can expect when you take the next step toward homeownership.
Pre-Approval
Pre-approval is an application that demonstrates your eligibility for mortgage programs. This process involves providing personal finance information, such as tax returns, pay stubs, and a credit check. You’ll then get confirmation that you are eligible for up to a certain loan amount.
While this is not the same as being approved, it can help you stay competitive in the housing market by demonstrating to sellers that you’re serious about buying a home.
House Shopping
Finding the perfect property within a first-time buyer's price range is the most exciting step. Working with a real estate agent can help ease the process, as they will be familiar with school districts, local amenities, homeowners’ associations, and any deed restrictions that may make it hard to customize your home after purchase.
Your realtor will also be able to negotiate on your behalf with the seller to reduce the upfront costs, such as title searches and earnest money deposits.
Mortgage Application
Even if you have been pre-approved, you will still have to fill out a mortgage application, which will have much of the same information.
You’ll provide details about your employment history, any previous residences, and any additional debts you have other than housing, such as credit cards and student loans.
Loan Processing
Loan processing involves evaluating all the information you have provided, which includes your personal income information and details about the home in question. They’ll verify your employment history, check that your income matches your tax returns, and that you have the assets you claim, whether that is stocks, bonds, or savings.
The information will help you decide your minimum down payment and the interest rates you’re eligible for based on your debt-to-income ratio and credit score. You’ll also get an idea of what your monthly payment will be so you can plan ahead.
At this stage, the home will be appraised to determine whether the purchase price matches the market value; this ensures that the mortgage lender is not lending out more than the home is actually worth.
There will also be a thorough investigation of the home itself. That includes checking that there is a title that the seller is legally allowed to transfer to you. Property taxes will be assessed and considered, and the processor will ensure that there is valid homeowners’ insurance.
Underwriting
Underwriting is about double-checking that all the information you have provided is correct and that your application has no unforeseen issues.
Everything you gave to the loan processor, including W2s, debts, assets, employment history, and the appraisal, will be manually assessed. This ensures no unpleasant surprises for you or the mortgage lender after the process is completed.
Depending on the information you have provided, underwriting may take less than a week or up to a month.
Once the underwriter is done, they will give your loan conditional approval. This is great news, and it means that you’re almost ready to close. The underwriter sends your loan back to your loan coordinator, confirming that you’re conditionally approved, and then decides what other information they might need.
During this time, you may be asked to provide further documentation about yourself or about the home in question. When this happens, be sure to respond promptly to avoid further delays.
After you’ve provided everything, you’ll finally get that magic statement: you’re clear to close. Now, your closing date will be scheduled, and you’ll prepare for the final meeting to go over everything again.
Closing
At closing, you will provide your down payment and closing costs, and your loan officer will review the Closing Disclosure. This discloses your monthly payments, interest rate, any penalties for non-payment, and the loan schedule.
There will be a large packet of paperwork to sign, which transfers the title of the home to you and confirms that the seller is now giving up their claim to the property. You must bring a photo ID and a personal check or bank check covering your down payment and closing costs.
Lastly, your loan is funded: the lender will disperse the funds to cover the purchase amount, and you’ll begin repaying it in monthly installments with interest. At last, you have the keys to your brand-new home in hand.
Qualifying for a First-Time Homebuyer Loan
While every loan type has slightly different requirements, whether that is the amount of down payment or the credit score necessary, there are some commonalities amongst the programs. These are the requirements you can expect to meet for any loan.
Minimum Credit Score and History
For most loans, the minimum credit score is 620, though FHA loans, VA loans, and USDA may go as low as 500.
You also cannot have had any bankruptcies in recent years. The period varies from 4 years to 2 years, depending on the documentation you can provide explaining why you had to undergo bankruptcy.
Debt-to-Income Ratio (DTI)
Debt-to-income ratio refers to how much of your monthly income is for debt service, such as credit cards, medical debt, student loan debt, or car payments. Usually, no more than 36% of your monthly income should go to debt service, though some lenders will allow up to 43%. FHA lenders might allow as high as 57%, though this is rare.
Down Payment Requirements
While some loans don’t require a down payment, you are more likely to get better rates if you provide something down. A Federal Housing Administration loan will need at least a 3.5% down payment, depending on your borrowing profile, and conventional mortgages will need between 3% and 10%.
For conventional loans, you will have to pay private mortgage insurance if you provide less than a 20% down payment. This insurance will remain in place until your loan-to-value ratio drops below 80%.
Income and Employment Verification
The income necessary to purchase a home depends on the home’s value. To calculate how much you can afford, consider the 28/36 rule, which means that only 28% of your monthly income should go to housing. This means that if you make $5,000 per month, your mortgage should be no more than $1,400.
Lenders will want to see tax returns and pay stubs, which can make it hard for self-employed borrowers to qualify. You will typically need to provide proof of at least 2 years of employment to qualify for a mortgage.
Down Payment Assistance Programs & Grants
We understand that even 3% can feel insurmountable for some borrowers, especially individuals from marginalized communities. Approximately half of LGBTQ+ adults say that they are financially unwell, compared to just a quarter of the general public. Similarly, Black individuals have a debt-to-asset ratio that is 50% higher than white individuals, and women of color are significantly more likely to have student loan debt than their colleagues.
If the expense of closing costs and your down payment seem insurmountable, there are many options to help.
Several different types of assistance programs exist, including down payment assistance grants, forgivable deferred payment loans, no-interest loans, and savings programs.
Grants, often offered by state and local governments, do not need to be paid back, though they often have strict qualification requirements. They may be provided in conjunction with a specialized first-time homebuyer mortgage with advantageous terms.
Many municipalities provide additional grants for teachers, emergency medical technicians, nurses, and law enforcement officers.
Down payment assistance loans are usually a second mortgage. Unlike your primary mortgage, these second mortgages require no monthly mortgage payments, and the entire loan may be forgiven if you stay in your home for a set period of time.
Matched savings programs are provided by government or private entities. If you contribute a set amount and fulfill other conditions, like completing a first-time homebuyer course, you’ll receive additional funds for your down payment.
Why Choose Pride Lending for Your First Home Loan?
Pride Lending is fiercely dedicated to underserved eligible buyers, including LGBTQ and BIPOC individuals; we’re the first loan company in the country focused on serving the LGBTQ community. Our goal is to reduce barriers to homeownership for people of all identities and backgrounds while educating buyers about their many options.
Our team is composed of allies and members of minority groups, which includes seasoned LGBTQ+ professionals and BIPOC mortgage offers. We’re familiar with the challenges that many face when seeking financing and are committed to assisting everyone, no matter how they identify.
When you work with us, you’ll receive access to competitive rates, personalized service, and recommendations for educational resources that will ensure you’re prepared for the next step of your life journey. Our customers benefit from our years of experience in the mortgage industry, as well as our empathetic service that recognizes the challenges LGBTQ first-time homebuyers face.
Pride Lending has been recognized as a Certified LGBT Business Enterprise by the National Gay and Lesbian Chamber of Commerce, and our founder was honored as the National Association of Mortgage Brokers (NAMB) Broker of the Year in 2022.
Get The Best Rates for Your First Home Loan
Take the first step toward homeownership with confidence! Get qualified today to learn how much you can afford, or contact us to discuss your mortgage options based on your unique financial goals.
Pride Lending’s highly accomplished loan team is excited to help you purchase the home of your dreams. Call us today to begin the next chapter of your life!
