FHA

Mortgages backed by the Federal Housing Administration (FHA) offer generous benefits to first-time homebuyers. Among them are:

• Down payment as low as 3.5%.
• Credit score of at least 580 to qualify for a 3.5% down payment.
• Minimum down payment of 10% for a borrower with a credit score of 500 to 579.
• Debt-to-income ratio (DTI) as high as 55%. DTI represents your monthly debt payments divided by your gross monthly income (income before taxes and deductions). This ratio helps a lender assess your ability to make monthly mortgage payments.

These mortgages are available from FHA-approved lenders, including Texas Regional Bank. The FHA does not lend money directly to homeowners.

Fannie Mae HomeReady

Fannie Mae’s HomeReady program also provides advantages for first-time homebuyers. Among them are:

• Down payment can be as low as 3%.
• Down payment can come from a variety of sources, including gifts and grants.
• In most cases, a borrower’s annual income is supposed to be below 100% of their area’s median income.
• Credit scores as low as 620 are allowed.
• Special lending considerations are given to public servants (such as police officers, firefighters, teachers and health care workers) and military personnel.
• Special lending assistance is available for people with disabilities.
• Loan-to-value ratio (LTV) can be as high as 97%. LTV compares the amount of your mortgage with the appraised value of the home. Typically, the maximum LTV for a mortgage is 80%.

Fannie Mae guarantees mortgage loans by purchasing them from private lenders, which helps free up more money those lenders to offer mortgage loans. Fannie Mae does not lend money to homebuyers.

Freddie Mac Home Possible

Freddie Mac’s Home Possible program is another attractive option for first-time homebuyers. Among the benefits of this program are:

• Down payment can be as low as 3%.
• Down payment can come from an array of sources, including family members, employer assistance programs, secondary financing and “sweat equity.”
• In most cases, maximum LTV is 97%.
• Credit score can be as low as 660.
• A borrower’s annual income is supposed to be below 100% of their area’s median income.

Like Fannie Mae, Freddie Mac guarantees mortgage loans by purchasing them from private lenders, which helps free up more money those lenders to offer mortgage loans. Freddie Mac does not lend money to homebuyers.

Mortgage Tips for First-Time Homebuyers

Regardless of what type of mortgage you choose, you can take steps to improve your odds of qualifying for a loan and getting the best terms possible. Here are seven tips for first-time homebuyers.

1. Check your credit reports. What shape is your credit in? Be sure to obtain credit reports from all three credit bureaus (Equifax, Experian and TransUnion) to give you good sense of where you stand. Are there errors on your credit report that could be dragging down your credit score? Fixing those errors might give you a better shot at getting a mortgage loan with a lower interest rate.
2. Check your credit score. Looking at your credit score can give you an idea of whether you need to boost your credit score. For instance, are you carrying a lot of debt that’s weighing down your score? If so, work on decreasing that debt to lift your score.
3. Save for the down payment. If you haven’t got much cash set aside for a down payment, start putting aside money for the down payment well before you plan to close your home purchase. It’s best to put that money in a bank account that you’ve set up solely for the down payment.
4. Seek assistance. Be sure to explore federal, state and local programs that provide help with down payments.
5. Get paperwork in order. A lender will want to review all sorts of documents, such as bank statements, when it considers your mortgage application. If you haven’t already done so, keep these documents in a computer folder or paper folder. 
6. Avoid new credit. As soon as you decide to buy a home, steer clear of opening new credit accounts or building up debt. New credit or more debt can put a dent in your credit score.

Pay bills on time. Your payment history makes up a big chunk of your credit score. If you’re paying bills past the due date, you could be jeopardizing your credit score.

Are you a first-time homebuyer? Make an appointment with Texas Regional Bank so one of our lending professionals can go over your mortgage options.

Texas Regional Bank Mortgage, NMLS Number 804865. All loans subject to approval, including credit approval. Some Restrictions may apply. Texas Regional Bank Mortgage may change the products, services, and other information described on this site at any time. Texas Regional Bank Mortgage does business as TRB Mortgage in the State of Texas.