First time home-buyer – How to get a loan

9 Jun, 2021

First time home-buyer – How to get a loan

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You may always have dreamed of becoming a homeowner, and now the moment is nearly here. You have found a property you want, you’ve been saving for years and you’re ready to settle down. How do you get the home loan as a first time home-buyer? Read on to learn the best approach.

First-time home buyer –  How to get a home loan 

first time home-buyer
First time home-buyers need to plan to achieve their goal of buying their own home

If you’re a first-time home buyer, you’re probably feeling pretty frazzled right now. There are countless options for you out there, from fixed-rate to adjustable-rate loans, but even when you do decide on one, a new question arises. Are you ready to be able to get it? 

The good news is that you can take steps to be ready soon or to increase your chances of getting the loan if you think you won’t. Steps that range from improving your credit score to having the money for the down payment. 

Today, we’re going to share some tips on how to get a home loan, so keep reading. 

  1. Improve your credit reports 

You can work on improving your credit score to improve your chances of getting the loan you want.

One way to do this is to remove collections from your credit report by disputing them. Don’t use your credit card too much and always be on top of your credit payments for the ideal credit score. 

This will help you look like a good candidate to be offered the loan, and your chances of getting the home of your dreams will increase. 

You can get a free credit report every year from TransUnion, Equifax, and Experian. For a small fee, the report can even include your credit score. Take a look at those reports and think about the steps you need to take to improve the report. This is one way to aim for the ideal credit score

1. Save for your down payment 

Depending on what loan provider you chose, the down payment on your loan can be anywhere between 2.25% to 20% of the total amount. Save money regularly so you have this amount ready when the time to get your loan draws near. This will only make it easier for you as a first time home-buyer.

Try setting up regular deposits to your savings accounts, or drawing up budgets to make sure you’ll have the right amount ready in time. There are also services that can help you get a loan for your home, even if you’re only able to manage a small down payment. You could consider a SoFi loan to help you get to that final viable stage with your down payment. 

2. Have the right documents ready 

You’ll need to provide a lot of financial documents to your loan provider before they approve your loan. The main goal for this step is to make sure you’re eligible for the loan, and would be able to pay it back. 

At the very least, you’ll need your last two pay stubs, your most recent W-2, your bank and brokerage statements, and your last two years of tax returns. 

Make sure you have your documents ready in advance, and any other documents that your loan provider specifically requests. It might take a while for you to obtain some of them, so it’s best to think ahead in this case. 

3. Are you pre-qualified? 

Many real estate agents will only work with you if you’re pre-qualified for a loan. Being pre-qualified also broadens your horizons and can make you better able to compare different options. 

You can get pre-qualified pretty easily. All you’ll need are some financial documents, information on how much income you have, how much money is in your savings accounts, and what investments you have. Once you’re pre-qualified, you’ll also have a better idea of what loan options you can afford and what you can’t. 

4. Don’t mess up your credit score  

Remember, credit providers can review your credit report again before your loan officially closes. Be very careful about where you spend your money while your loan is being processed. And  don’t request any more credit cards or take out any car loans while your loan is in the works. 

Doing so will only improve your chances of getting the loan, and you can always get whatever you need after the loan has been approved. 

A final tip for the first time home-buyer

When you go into the loan office, you need to look your financial best. That means having all your documents in order, with secure employment and a solid credit score. Make sure you have prepared well. It will help you on the road to becoming a homeowner!


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