First-Time Homebuyer Guidance
A Clearer Path to Your First Home
Sarah Bell Lane provides clear mortgage guidance for first-time homebuyers — covering preapproval, documentation, loan programs, and what to expect from application through closing.
What First-Time Buyers Need to Know
Prequalification vs. Preapproval
Understand the difference between an initial prequalification based on unverified information and a full preapproval requiring documented financials. Neither represents a commitment to lend.
Estimated Cash to Close
Your cash needed to close includes your down payment and closing costs. Review your Loan Estimate carefully to understand these projected figures.
Credit Review
Your credit history is thoroughly reviewed during the application. Different loan programs have varying credit score and history requirements.
Income Documentation
Lenders require documentation of income, typically including recent pay stubs, W-2s, and potentially tax returns, especially for self-employed borrowers.
Asset Documentation
Two to three months of recent bank statements are standard. Lenders must verify that funds used for closing are properly sourced according to guidelines.
Debt-to-Income Ratio
Your debt-to-income (DTI) ratio compares your monthly debt obligations to your gross monthly income. Programs vary in their maximum allowable DTI limits.
Loan Program Selection
Your financial goals and qualifications will help determine the most suitable loan options, which may include Conventional, FHA, VA, or USDA financing depending on eligibility.
Property Search
Work with a licensed real estate professional to find properties. Keep in mind that the property itself must also meet lender guidelines and requirements.
Appraisal and Underwriting
Once you have a contract, an appraisal will assess property value and condition. During underwriting, your full application package is formally evaluated for final approval.
Closing Preparation
You will review a Closing Disclosure summarizing final loan terms and costs before closing. Ensure you arrange for required certified funds as instructed by your title or escrow company.
Preparation
Common Documentation for a Mortgage Application
Exact requirements vary. Sarah will provide a specific list based on your application.
Your Documentation List May Vary
Self-employed borrowers, those with multiple income sources, recent employment changes, or complex financial situations may have additional documentation requirements. Sarah will identify exactly what is needed once your application is reviewed.
First-Time Homebuyer Questions
Credit score requirements vary significantly by loan program. Some programs are available to borrowers with lower credit scores than conventional financing requires. Other qualifying factors — including income, assets, debt-to-income ratio, and property — also affect your eligibility. A credit review is part of the application process.
Down payment requirements depend on the loan program, lender guidelines, and your qualifications. Some programs allow for lower down payments for eligible borrowers. The amount you put down affects whether mortgage insurance is required and may affect your loan terms. Sarah can review program options based on your situation.
Closing costs are fees associated with obtaining the mortgage and completing the property transaction. Common costs include origination fees, title insurance, escrow fees, appraisal fees, and prepaid items like homeowners insurance. Costs vary by location, loan type, and specific transaction. Your Loan Estimate will provide a detailed breakdown.
Gift funds from qualifying family members may be acceptable for down payment and closing costs depending on the loan program. Gift funds typically require a signed gift letter confirming the funds are not a loan. Program-specific documentation and source requirements apply.
The timeline varies depending on how quickly you can provide documentation and lender processing time. Being organized and prepared with your documents before applying typically helps the process move more efficiently. A preapproval is not a commitment to lend.
Self-employed borrowers can qualify for mortgage financing. Documentation requirements are typically more extensive and commonly include two years of federal tax returns, profit and loss statements, and additional verification. Income is generally calculated using net income after business expenses, which may differ from gross revenue.
Student loan debt is included in your debt-to-income (DTI) ratio calculation. How monthly payments are counted varies by loan program — particularly for borrowers on income-driven repayment plans. This is an area where loan program selection can make a meaningful difference depending on your total debt picture.
Beginning the application process before actively searching gives you a clearer sense of your borrowing capacity and makes your offer more competitive to sellers. Most real estate agents recommend having a preapproval in hand before making formal offers on properties.
Ready to Start the Home Buying Process?
The first step is beginning your application through the Preferred Funding, LLC secure portal. Sarah will follow up to discuss your situation and next steps.