Jubilee - A First-Time Homebuyer’s Guide: Tips, Loans, and What to Know Before You Buy

Buying your first home is one of the most exciting and significant decisions you’ll make. While the process can feel overwhelming, understanding your options and preparing ahead of time can make it much smoother and more rewarding. Here’s what every first-time homebuyer should know.

Why Now Could Be a Great Time to Buy

While interest rates today are higher than in recent years, builders and lenders are offering creative ways to help make homes more affordable. Many builders offer incentives like:

• Interest rate buydowns to lower your monthly payments.

• Reduced closing costs.

• Credits for design upgrades or appliances.

These incentives are often time-limited, so if you’re thinking about upgrading your current home or buying your first, it’s worth exploring your options now.

Which Type of Loan Is Best for Me?

There are several loan types available, many of which don’t require a 20% down payment. Understanding your choices is crucial to choosing the right mortgage for your situation.

Common Loan Options:

Conventional, fixed-rate mortgages
Available in 10, 15, 20, 30, and even 40-year terms, with 15- and 30-year being most common. Typically requires ~20% down to avoid private mortgage insurance (PMI), though some programs let you put less down.

FHA Loans
Backed by the Federal Housing Administration, these are great for buyers with lower credit or smaller down payments (as low as 3.5%). For example: on a $350,000 home, an FHA loan with $15,000 down could result in a monthly payment around $2,189 (at ~6.8% interest, not including taxes and insurance).

VA Loans
For veterans, service members, and some surviving spouses, these loans are backed by the Department of Veterans Affairs and often require no down payment.

Adjustable-Rate Mortgages (ARMs)
These loans start with a lower rate than fixed loans but adjust over time. They can be a good option if you plan to move or refinance before rates adjust upward.

What Should I Do Before I Start Shopping?

Buying a home is more than just finding a property you love. Preparation is critical.

1. Check Your Credit

Your credit score directly impacts your loan eligibility and interest rate. Review your credit report for errors and aim for a score above 620, though higher is better.

2. Understand Your Debt-to-Income Ratio (DTI)

Lenders generally prefer your DTI to be below 45% (your monthly debts divided by gross monthly income). Lower DTI means you can comfortably afford your mortgage.

3. Save for a Down Payment + Closing Costs

In addition to the down payment (which can be as low as 3–5% with some loans), budget for closing costs (typically 2–5% of the purchase price).

4. Get Pre-Approved

Before house hunting, get a pre-approval letter from a lender. This shows sellers you’re serious and gives you a clear budget.

5. Budget Beyond the Mortgage

Don’t forget about property taxes, homeowners insurance, HOA fees, maintenance, and utilities when calculating what you can afford.

How Builders Can Help

Many builders offer attractive buyer incentives, such as:

• Temporary or permanent interest rate buydowns.

• Assistance with closing costs.

• Credits toward upgrades (like flooring, appliances, or landscaping).

These offers can make a big difference in your affordability, but they’re often time-sensitive. Check community or builder websites or speak to a builder’s sales representative for details.

Pro Tips for First-Time Buyers

• Work with a real estate agent who has experience with first-time buyers.

• Don’t make large purchases (like a car) or open new credit lines while you’re under contract; it can hurt your loan approval.

• Consider the resale value of the home and the neighborhood.

• Don’t stretch your budget to the max. Leave room for savings and unexpected expenses.

• Shop around for lenders — rates and fees vary widely.

Ready to Take the First Step?

Explore local builder incentives, calculate your monthly payments, and talk to a lender about what you can afford. With the right guidance, your dream of homeownership is absolutely within reach.

start your home search now

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