Last Updated on October 7, 2022 by Luke Feldbrugge
It’s easy to get overloaded with information when entering the real estate market, especially if you are a first responder first time home buyer. You are probably very good at handling stress, because that’s part of your job. But the stress that comes from diving into the housing market for the first time is a different brand altogether. It involves loan applications, reams of paperwork, negotiating skills, a basic financial understanding of how loans work and more. None of this is intuitive. Very little of it calls on the skills you use to be successful first responders. So, let’s take a step back for a minute.
You don’t have to know everything about this entire process. We at Homes for Heroes cannot overstate how important your real estate agent will be in this journey. They are the experts, so let them be the experts. For their part, if you come to the table with a basic understanding of the first time home buying experience, they will be able to take you the rest of the way to finding the right home at the right price.
With that said, we hope this post provides you with the basic understanding so you can ask the right questions when you speak with your real estate agent.
Of course, affording your first home is a huge challenge, so we will also look at ways to save money as you go through the process.
5 First Responder First Time Home Buyer Tips
In the interest of giving you a manageable list to wrap your head around, we are going to just present these five tips so you can begin the home buying journey. Are there more? Certainly. You could read about first home buying tips until you grew very tired, but this is the boiled down version of things you should know and think about when applying for your first mortgage loan.
1) Find a Real Estate Agent
We’ve said it once, but we can’t stress this tip enough. A real estate specialist is your trail guide, your mentor, your consultant, your friend, your expert, your advisor and your cheerleader – all during different phases of the real estate process. You will feel much less alone, much less at the whims of the market when you pair yourself with the right real estate agent.
That’s why Homes for Heroes pairs you with a real estate specialist as our first step. A local specialist who joined our program intentionally to focus on serving and giving back to first responders for all they do in the community. We believe this is the kind of person you deserve to have working with you. Sign up today to speak with our local real estate specialist to find out how they can help you purchase a home and save you significant money in the process.
Homes for Heroes will also help to pair you with our local affiliate mortgage lender, title company and inspector. If you close on a home with our specialists, you will receive an average of $3,000 after closing to use toward new home expenses like furniture, appliances, decor or renovations.
2) Get Your Finances Together: Have a PITI Party
Before you start looking (assuming you aren’t already), you need to take a look at what you can afford. That doesn’t mean having a vague, ballpark house price you think you can afford. It means getting out a piece of paper or spreadsheet and start jotting down your income, your debts, your expenses, your rent, your credit score – as much of your financial life as you can put a number to.
Check out the Homes for Heroes Home Affordability Calculator Worksheet to help you determine what you can actually afford to pay for housing expenses without breaking the bank and allowing you to live a comfortable life.
The affordability calculator worksheet notes the following monthly housing expenses you may need to pay:
- Mortgage Premium
- Mortgage Interest
- Homeowners Insurance
- Private Mortgage Insurance (PMI)
- Property Tax
- Association Fees
- Don’t forget to budget for Maintenance and Repairs
Now might be a good time to use the Homes for Heroes mortgage calculator. It will help you figure out what the real estate and mortgage specialists call PITI.
PITI stands for:
- Principal (Mortgage Premium)
- Interest (Mortgage Interest)
- Tax (Property Tax)
- Insurance (Homeowners and PMI insurance)
These four factors will make up your monthly payment.
At this point, you should meet with a lender who will help you learn what you can afford. We recommend one of our Homes for Heroes Lending Specialists. You can find one easily by signing up to speak with our lending expert in your area.
They will help answer your questions about your budget and the home loan you can realistically afford. That means taking into consideration your taxes, medical insurance, utilities, grocery bills, etc.
Having a complete monthly budget is important in determining how much of a house you can afford. If you already have a monthly budget, great. If not, download a monthly budget planner and figure out how much money you spend a month.
3) Mortgage Pre-Approval is Important for a First Responder First Time Home Buyer
Meeting with the lender may also involve getting pre-approved for a loan. Going into the housing market without pre-approval is a bit like going fishing without bait…or a pole…or line. You get the idea.
If you are pre-approved, it means you can make offers on homes with the help of your real estate specialist. It means the mortgage lender agrees that you can afford a certain amount for a home. It comes with a pre-approval letter. The whole pre-approval package tells the home seller that you are ready to make an offer on their home, and it’s likely to be funded by the lender.
Being pre-qualified for a loan is a little different application process. Because the process does not involve a deep dive into your finances by a financial organization, it doesn’t have quite the same weight as a pre-approval. In a very competitive housing market, pre-approval makes more sense.
It’s good to remember that pre-approval is only good for 90-120 days, so get it right before you start seriously house hunting. There is, of course, a lot more to know about getting pre-approved if you are interested.
4) House Hunting for a First Responder First Time Home Buyer
Ok, enough about money and finances. This is the fun part.
Use the Homes for Heroes House Hunting Checklist to determine the must-haves and the nice-to-haves for your home. It is a free download you can print out and reference during home showings.
There are two steps:
- Step 1: Identify Your Ideal Home – This includes the area, home price, type of home, square footage, interior options, exterior options and preferred school districts, and much more to think about and discuss.
- Step 2: Prioritize – This is where you take everything you chose for your ideal home, clearly define what are Must-Haves and Nice-To-Haves, and prioritize them chronologically.
At the bottom of your printout, you can take some notes. That section is for unanticipated amenities, meaning that you jot down things you see in the houses you visit that you didn’t even think of. This can also be fun.
We understand writing on paper is pretty primitive. But when you are out on a house hunt, you don’t want to say “Siri, I need to have crown molding” and have autocorrect turn that into “Crow Bowling” on your phone or tablet.
5) Look Online and Offline
Online listings can be a blessing or a curse. Your grandparents or parents would have loved all the information and features you can get in one simple online house listing. It expedites decision-making at a level we don’t always appreciate. The curse side of it is that it can be overwhelming. However if you truly focus your search on what you can afford and what you must-have, it will help you avoid all of the clutter and allow you to concentrate on the properties you really need to see in person (if possible).
There is no substitute for visiting a prospective home that has peaked your interest. This visit – ideally during an open house – will show you the specifics of what you read online. For example, is the seller’s definition of a big yard the same as yours? Will their 3-stall garage only fit two Coopers and a motorcycle or is it big enough for your truck? When you hit the road, make sure you have:
- A pen or pencil
- Multiple copies of your checklist and a pen
- A tape measure
- A flashlight
- A copy of your pre-approval letter (just in case)
- A list of questions you had after seeing it online
House hunting is fun but it’s also fast-paced and emotional. You only get so much time to evaluate everything these days. It’s easy to get distracted by the possibilities if the home you are looking at may actually be your first home. Don’t be afraid to fall in love with something, but also listen to your spouse, your family, or your real estate specialist if they raise some red flags.
3 Ways a First Responder First Time Home Buyer can Save Money on House
A first responder first time home buyer should consider mortgage programs that are available, because affordability is important. It’s part of the “first home” equation.
Homes for Heroes – Average Savings is $3,000 After Closing
Our process and the help we provide is specific to community heroes such as yourself (and other firefighters, EMS, law enforcement, military, healthcare workers and teachers). We’ve been at it for 20 years, and we have learned a thing or two along the way. We have developed a complete process that is designed to help a first responder first time homebuyer navigate the real estate market with confidence. There are three main things we do for you:
- We have local real estate professionals nationwide that can help you find a home.
- We have mortgage lenders who can help you with the mortgage loan.
- We give you Hero Rewards® savings at the end of the journey, when you close on your house with our real estate and mortgage specialists, and the average amount received is $3,000. Simply sign up to speak with our specialists. They would be honored to answer your questions. There is no obligation.
The savings received is often used for common new home expenses like appliances, furniture, decor, carpet, paint, repairs, renovations, or any number of projects that emerge after they buy their first house.
“The entire selling and buying process went wonderful with the Homes for Heroes program. We work in the medical field and it feels great to be appreciated. This extra help has been amazing, especially with all the moving expenses. Thank you so much for helping our family.” – Sandra and Justin – EMS – WA
Use an FHA Loan
First responder first time home buyers should know about FHA loans. These mortgages are insured by the Federal Housing Administration and only have a 3.5 percent down payment requirement when you get your loan for your primary residence. The FHA doesn’t actually issue the loan; it comes from a traditional mortgage lender. By insuring the loan, it gives a loan officer the confidence to lower the down payment for first-time buyers.
The eligibility requirements for an FHA loan include:
- Your credit score needs to be above 580. The FHA mortgage is somewhat unique because you can actually get one if your credit score is as low as 500, but then your down payment would be 10%, not 3.5 percent.
- You need proof of steady employment.
- You show a history of honoring debts.
- You can prove you have sufficient income.
NOTE: The FHA does want first time homebuyers to have private mortgage insurance (PMI) for the loan.
Use a VA Loan for Your Mortgage Loan
If you have been in the military previous to starting your first responder career, Veterans Affairs loans are a popular option. These loans are for active service members, military veterans or eligible surviving spouses. Here are the benefits for eligible borrowers:
- No down payment
- Low interest rate
- Limited closing costs
- No private mortgage insurance
- Lifetime benefit (you can use this multiple times)
In terms of first home buying, the benefits of VA loans are sort of the gold standard.
HELPER Act Would be Great!
There’s a piece of legislation that could be very good news for first responder first time home buyers. It’s called the HELPER Act, and it is a new loan program that has been introduced in the House of Representatives. It is currently still a bill being debated. The title stands for: Homes for Every Local Protector, Educator and Responder. Some are comparing it to VA loans because it provides zero-down-payment for first responder home loans (for qualified borrowers).
Large down payment requirements can keep first time home buyers out of the housing market. If this legislation allows you to skip these upfront costs, it’s a significant step forward for first responder loan programs. Under this act, first responders could also skip monthly mortgage insurance premiums (though there is one up-front 3.6% mortgage insurance premium).
As this goes through Congress, keep an eye out for its progress.
Helping community first responder first time home buyers find their first home is truly a rewarding experience for our local real estate and mortgage specialists. They joined Homes for Heroes because they want to serve and give back to their local hero communities. Buying your first house is a big deal, because it becomes your home. And, it would be an honor to help you find yours. Simply sign up to speak with our local specialists today to set things in motion.