Young family relaxing in yard with tulips and home in the background
Young family relaxing in yard with tulips and home in the background

spring into your new home: 3 common house-buying myths debunked

Tips for first-time homeowners to make buying your first home a breeze

Spring is widely recognized as the most popular time of year to buy a home. If you’re a first-time home buyer navigating the housing marketing, it can feel overwhelming. There is a lot of information to consume from many different sources – how do you know what’s accurate? We’re here to help answer home-buying questions and dispel some of the mystery surrounding the housing market. Here are some common myths and the truth behind them.

Myth #1: You need a 20% down payment

While a 20% down payment may be the traditional standard, it’s certainly not required for purchasing homes today. If you want to buy a house but don't have 20% to put towards your down payment, there are a variety of options that may be available to you. You may qualify for a USDA, FHA, or VA loan, which offer no or low down-payment options. With any loan, having a good credit score benefits the home buyer. Mortgage Loan Officers will look at your credit to help determine mortgage rates and loan terms. First Financial also offers a variety of affordable loans for qualified borrowers, including our Community Builder, Dream Builder, and CHAMP loans. Here are some highlights from each loan.

Government Loans

USDA: A USDA loan is a United States Department of Agriculture loan. USDA loans “assist approved lenders in providing low- and moderate-income households the opportunity to own adequate, modest, decent, safe and sanitary dwellings as their primary residence in eligible rural areas.”1 Those who qualify must meet income-eligibility and agree to personally occupy the residency, among other requirements. To check your eligibility, you can head over to USDA’s website.

FHA: An FHA loan is a Federal Housing Administration loan. FHA loans are credit score-dependent, which make them a good option for those with lower credit scores. With a minimum 3.5% down payment for borrowers with a credit score of 580 or higher, FHA loans are often a good fit for first-time home buyers.2 It's also a good option for those with limited savings or a history of bankruptcy. More information is available on the U.S. Department of Housing and Urban Development’s website.

VA: A VA home loan is a veteran-backed loan for veterans, service members, and surviving spouses. With a VA home loan, buyers are able to purchase their home with a 0% down payment. They also offer lower interest rates, flexible credit guidelines, limited closing costs, and no private mortgage insurance payments.3 VA loans are available to help veterans buy, build, repair, retain, or adapt a home for personal occupancy. The U.S. Department of Veterans Affairs has more information on their website.

First Financial Bank Loans*

Dream Builder: A program designed to help home buyers afford more home. Grant programs are available and a second mortgage up to 7% of value can be used for the down payment.4 Qualified borrowers may also receive reduced closing costs on their first mortgage, and no closing costs or interest on their second mortgage.

Community Builder: For home buyers with limited credit history or limited income, as well as those who want to buy a home in a low- to moderate-income area, our Community Builder program helps you save money. With no private mortgage insurance requirements, reduced closing costs, and options for grant funds and repair escrows, this loan helps make dreams come true.

CHAMP: A Community Housing Affordable Mortgage Program loan provides affordable options for home buyers with limited credit history, limited income, or looking to purchase a home in a low-to-moderate income (LMI) area, including first-time home buyers. Down payment options are less than 20% and private mortgage insurance may not be required.5

Myth #2: It’s cheaper to rent than to own

You may have heard it’s cheaper to rent than to own a house. And while that may be true in some cities across the U.S., it usually pays off in the long-term to purchase your own home. When you’re a homeowner, you have steady, fixed-rated payments with a mortgage. When you rent, your payments are up to inflation and the discretion of the landlord. As a homeowner, you’ll be increasing your personal wealth. The savings, tax benefits, and stability are other great reasons to buy a home. Not to mention the equity in your home is a powerful tool, and after several years it may provide to you further opportunities like a HELOC. A home equity line of credit can help fund home renovations, a dream trip, debt consolidation, and more. If you might be ready to own your own house, but aren’t sure were to start, it may be easier than you think.

The first step in the home-buying process is to reach out to a mortgage lender and get pre-qualified for a loan. It’s important to find a knowledgeable Mortgage Loan Officer, as they’ll help you find the best mortgage lending solutions and assist with closing costs, interest rates, and more. Your Mortgage Loan Officer will help you get prequalified for a loan and estimate how much you can borrow. They can help you manage expectations, look over your options, and get your foot in the door, and with their expertise, you can determine your budget. There are a variety of mortgage calculators available to help you understand your budget and the type of house you can afford. Don’t forget: in addition to your mortgage, you’ll be paying insurance, utilities, possible HOA fees, and more. If you have questions or simply want more information on the home-buying process, check out our blog for first-time home buyers.

It’s important to find a knowledgeable Mortgage Loan Officer, as they’ll help you find the best mortgage lending solutions and assist with closing costs, interest rates, and more. 

Myth #3: You’ll be stuck with the same mortgage payment forever

If you’re hesitant to buy a house when interest rates are high, you’re not alone. As of April 3rd, 2024, the national average for a 30-year mortgage was 7.05%.6 However, if you have the savings, a good credit score, and are ready for the commitment of buying a home, don’t let high-interest rates be the one thing holding you back from buying a home. You don’t have to be stuck with high rates for the next 30 years – refinancing is a viable option to lower interest rates and term loans. When you refinance your loan, you replace your current mortgage with an entirely new loan. This can be done with your current lender or a First Financial Loan Officer. When you refinance, you could lower you interest rate, lower your monthly payment, decrease your loan’s term, change from an adjustable-rate to a fixed-rate mortgage, and more.

Have questions about your mortgage options? We have answers. Our experienced Mortgage Loan Officers are available and ready to offer solutions that fit your needs. First Financial offers a variety of mortgage options to give you flexibility and help you find home of your dreams.