There are a few things for which first time home buyers are often unprepared. These tips will help people buying their first home to anticipate the problems which can arise and to be prepared to make an offer when they find their perfect home. Many first time buyers are eligible for mortgages under the FHA (Federal Housing Authority) program or the VA (Veterans Administration) program, but while buyers can qualify for these mortgages more easily, they do have some pitfalls.

Federal Housing Grants

If you are a first time buyer you may qualify for federal housing grants of up to $10,000. These grants can be used as a down payment or to cover closing costs. The grants are based on the income of the applicants and are intended to help buyers who might not otherwise be able to afford a home get into the housing market for the first time. Grants are not loans and do not have to be repaid. Information about federal housing grants is available at the HUD website.

Down Payment and Closing Costs

If you are a buyer who is not seeking an FHA or VA mortgage you will need at least a 10% down payment for your new home. FHA and VA mortgages usually require a 3% down payment. In addition to the down payment, buyers will need enough cash to cover the closing costs which can run between $5,000 and $10,000, depending on the cost of the home, and the cost of a home inspection which usually runs between $500 and $1000 depending on the area where the house is located.

Pre-Qualifying for a Mortgage

It is advisable for you to pre-qualify for a mortgage before even looking at homes. This gives perspective home buyers the best idea of the price range of the homes they can afford and they have an advantage when they make an offer on a home if they have already pre-qualified for their home loan. Pre-qualifying for a loan can speed up the closing process and it will help avoid the disappointment some buyers face when they cannot qualify for a mortgage on their dream house.

Home Inspections for FHA and VA Mortgages

After they select a house, first time home buyers who have qualified for a mortgage through FHA or VA programs will have a home inspection performed by a government inspector. These programs have stringent rules for home construction and many older homes may not pass the inspection. If the home fails the inspection, the seller can fix the problems or you can set aside enough money in an escrow account for the repairs and the mortgage may still be approved.

Independent Home Inspections

Sellers want to get the best price for their home and may not disclose problems with the home. A first time home buyer who is not financing through the FHA or VA programs should hire an independent home inspector to examine the home they have selected. Even brand new homes can have deficiencies and an independent home inspector can help you avoid thousands of dollars in repairs after you buy the home by locating potential problems before the sale is final.

As a first time home buyer you should educate yourself about the local housing market before you begin looking for a home. There are almost always unexpected expenses that crop up during a home sale and it is best to be prepared for the unexpected before making an offer. Using these tips can help first time buyers avoid some of the problems that may occur when your are ready to buy your first home.