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Kansas First Time Home Buyer Loans

Get a Mortgage Loan to Buy Your First Home in Kansas
Loan Program Options - Down Payment Assistance - Fast Loan Approvals

Kansas First Time Home Buyer – 2019 Loan Programs

Are you looking to purchase your first home? Our first time home buyer programs might be the perfect solution to help you obtain the financing you need to purchase the home you desire. We provide excellent home financing options, and encourage you to compare our offered loan terms to other mortgage lenders.

Kansas First Time Home Buyer Loans

There are 5 types of first time home buyer loans.  You may select different loan terms, such as a fixed rate or adjustable rate mortgage, and the number of years to repay the loan (such as a 30 year fixed rate mortgage).

Types of Mortgages:

  • Conventional Loans – Conventional loans offer the best loan terms to borrowers with good or excellent credit, as well as those who can afford to place a larger down payment.  If you are able to put 20% or more down, you will be able to avoid paying private mortgage insurance (PMI).  However, conventional loans also offer low down payment options, such as programs that only require 3% down.
  • FHA Loans – FHA loans are a good option for borrowers who may not be able to qualify for a conventional loan.  The qualification requirements for FHA loans are much more lenient than conventional loans.  This includes options for home buyers with credit scores as low as 500 (in order to qualify for a 3.5% down payment, you must have a credit score of at least 580).
  • USDA Loans – USDA loans provide home buyers the opportunity to purchase a home without any down payment.  These loans are intended for borrowers with low-to-moderate income.  In addition to not requiring any money down, you can also finance the closing costs into the loan.  This means you can essentially buy a home with no money out of pocket!
  • VA Loans – Active duty military members and veterans can apply for a VA loan which allows you to buy your first home without any down payment.  These loans are not available to the general public, but exclusively to military/veterans.
  • Jumbo Loans – Any loan that does not meet the conforming or FHA loan limits is a jumbo loan.  The FHA loan limits depend on the county.  If you would like to view the FHA loan limits for Kansas, you may do so at the bottom of this page.  The conforming loan limits, which are applicable to conventional and VA loans, is $484,350 for a 1 unit property.  If you want to buy a more expensive home than what these limits will allow, and have the income to qualify, we provide what are known as jumbo loans up to $2,000,000.

The above 5 types of loans are the main first time home buyer options that exist.  We can help you determine which loan is the right fit for you based on your particular needs and eligibility.

For most borrowers, the decision will be between an FHA and conventional loan.  You can read more below about the requirements for each type of loan.  When you get pre-approved it simultaneously checks your eligibility for all home loans, including what loan terms and interest rates are offered for each mortgage available to you.

FHA Loans for First Time Home Buyers 

For many applicants, including those that do not qualify for a conventional loan, will likely find an FHA loan to be the best loan option.  The current basic requirements to obtain an FHA loan are outlined below.

FHA Loan Requirements:

  • Credit – Some FHA lenders are known to allow a 580 FICO score.  All of our home loan products require a 620 credit score.  Some other aspects of credit that are evaluated are past bankruptcies, foreclosures, tax liens, and judgements.  You can read more about the FHA credit requirements, here.
  • Down Payment – FHA loans are famous for only requiring 3.5% down.  This money can be borrowed from family or friends, or a down payment assistance program.  In some cases, someone may qualify for an FHA loan, but must pay a higher down payment.  Most that qualify for FHA, qualify for a 3.5% down payment.
  • Employment – FHA loans require 2 years of verifiable employment history.  It is acceptable to have changed jobs in some instances, especially if you have stayed in the same line of work or industry.  The employment requirements are not very strict, just as long as you show evidence of 2 years history of reliable employment.
  • Debt-to-Income – The most important aspect of your income is not the total amount, but what percentage of your income is used to pay debts.  This is known as your “debt-to-income ratio”.  FHA loans allow a maximum DTI ratio of 43%, which includes your new mortgage payment, and any auto loans, credit cards, or other types of debts that show on credit (such as student loans and personal loans).  The maximum amount your mortgage payment can be compared to your monthly income is 29%.  You can learn more about FHA income guidelines, here.
  • Property – The property must meet “minimum property standards“.  This includes basic standards of living conditions that must be met, which ensures both a safe and healthy home to live in, and to ensure the FHA/HUD that if the home were to foreclose that it has a decent chance of being resold by due to providing a quality living space (the FHA insures the mortgage, if it defaults and forecloses, HUD is responsible to sell the home, so they only insure homes that meet specified standards.
  • Mortgage Insurance – All FHA loans are required to carry mortgage insurance.  For FHA loans, this is known as “Mortgage Insurance Premiums” or “MIP”.  There are two different types of FHA MIP (upfront and monthly), which you can calculate how much FHA mortgage insurance costs using our FHA mortgage insurance and mortgage payment calculator.

There are certainly both advantages and disadvantages to FHA loans.  The advantages would be the easier qualification guidelines, low down payment option, competitive interest rates, and other appreciable aspects such as loan assumability.  The only significant disadvantage would be costly mortgage insurance.

Conventional Loans for First Time Home Buyers

Conventional loans offer better loan terms for borrowers who have good or excellent credit history and/or that can place a larger down payment down on a home.  They are also often the best for certain borrowers who want a small down payment.  We can help you see what you qualify for and compare loan options.

Conventional Loan Requirements

  • Credit – A 620 credit score or higher is required to qualify.  However, to be eligible for a low down payment and the lowest rates, a 680 or higher is needed.  Additionally, no bankruptcies or foreclosures within the last 3 years is permissible.
  • Down Payment – The down payment requirements for a conventional loan vary from borrower to borrower.  Down payments as well as 3% exist for conventional loans, but often require 5% as the minimum down payment requirement.  Some that qualify for a conventional loan will be required to pay a higher down payment percentage.  If you have high credit and meet all other requirements, you should fall in the 3-5% range for minimum down payment requirements.   The only way to know for certain is to apply.
  • Employment – 2 years of verifiable employment is required for a conventional loan.  The required documentation to verify employment and income is pay stubs, W-2s, and tax returns.
  • Debt-to-Income – Maximum debt-to-income ratio of 29% and 45%.  The 29% represents the maximum percentage of your  monthly income that your mortgage payment can be.  The 45% represents the maximum percentage of your monthly income that your mortgage payment combined with all other reported monthly debt obligations may be.  This would include debts such as auto loans, credit cards, personal debts, and student loans.
  • Mortgage Insurance – Any loan over an 80% LTV will require mortgage insurance.  One aspect of conventional loans that is better than FHA loans is that if you put 20% down (or refinance at a future date when you have 20% equity), you do not have to pay mortgage insurance.  FHA loans require mortgage insurance to be paid regardless of LTV.

If you feel confident you have great credit, or wish to place a large down payment on a home, a conventional loan will likely be your best home loan option.  We would be happy to help you get a pre-approval for any loan that you qualify for.  You can then compare loan terms such as down payment, interest rate, mortgage insurance, and monthly payment.

To learn more about conventional loans, visit this page.

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Kansas Down Payment Assistance Programs 

Kansas Homebuyer Assistance Program – The state of Kansas offers an incentive to buy your first home, which includes up to 4% of the purchase price offered as down payment assistance.  In order to qualify you must have at least a 640 credit score (to not be required to contribute any funds for the down payment, you will need a 660).  The maximum home purchase price allowed for most of the state is $258,690, and for the metropolitan area of Kansas City it is $265,609 (which includes Leavenworth, Wyandotte, Johnson, Linn & Miami).

There are also other guidelines pertaining to debt-to-income ratios, occupancy, and your income limits.  The amount of income you can have depends on your location and how many people live in your household.  You can learn more about this program and view the income limits on the official website for the Kansas Housing Assistance Program.

In addition to these state programs, all HUD down payment assistance programs are available in Kansas. There are also various local incentives offered at the county and municipal level.  The best way to find out what you personally can qualify for is to speak with a mortgage specialist who can look into your eligibility or you.  You can also get pre-approved and know how much you can borrow, what your payment will be, and all other pertinent information.  To learn about what down payment assistance is available to you, and to get pre-approved for a home loan, request a free consultation today.

Kansas First Time Home Buyer Tax Credits

The Mortgage Credit Certification (MCC) tax credit provides you an opportunity to reduce your tax bill, as well as enhance your home loan application by reducing your debt-to-income ratios.  How this works, is you can deduct up to $2,000 off your federal tax bill each year.  The MCC allows up to 35% of your annual interest to be eliminated (with the cap being at $2,000).  Some great news, is this can be used in addition to standard mortgage interest deductions!

Frequently Asked Questions About Buying Your First Home

How much do I need for a down payment?
It depends on the type of loan you want.  USDA and VA loans often will not require any down payment.  FHA loans require a 3.5% down payment, which if you get down payment assistance, only .5% is required.  Conventional loans typically require either 3% or 5%.

How do I know if I am ready and prepared to own a home?
It is critical to consider the often unexpected expenses of buying a home. This includes repairs, maintenance, and of course furnishing the home, monthly utilities, and all other expenses that are associated with homeownership. A common mistake is to just look at the difference in rent to your total mortgage payment. Almost every year, you can expect to have to pay for various upkeep to keep the property functional. This can include anything from repairing a hot water heater that broke, to landscaping, and various maintenance.

Something else financial consultants advise is that you have at least 3 months of reserves. This means that you could afford to make your new mortgage payment for at least 3 months in the event that you lose a job or have some other unforeseen circumstance that the savings would be needed for. This is not a requirement for most home loans, but it is good advice to consider.

How much can I afford to borrow?
The amount that you can borrow depends on your particular loan type and income. There are maximum loan limits which are set at the county level. Conforming loan limits are the maximum lending amount allowed for conventional mortgages. FHA loans have their own loan limits. You can search the maximum loan amount for your county for each particular loan type by entering your zip code (or any zip code for the county you want to buy a home in). This will display the maximum amount available for all loan types. This is not necessarily how much you can borrow though, but the max amount in your location. Your personal limits will be based upon your income and how much debt you have. For instance, with most loans, you can not have a mortgage payment and debts exceed 43% of your income.

Can I buy a home without a real estate agent?
It depends on your state and the type of loan program.  For some states, you must use an agent.  In other states, you are not required to use a real estate agent for many loan program, such as conventional mortgages.  However, some loan types require that you use a real estate agent regardless of your location, such as USDA loans.

Can I buy a home if I owe tax debt?
For government-backed loans, such as FHA, VA, and USDA loans, you can buy a home with tax debt as long as you have made a payment plan with the IRS and are not behind on the payments. Any federal debt must be in good standing in order to get a government-based mortgage. If your tax debts have moved into the status of a tax lien, this will prevent you from getting a home loan until it is resolved.

Can I buy a home if I have student loans?
As long as you are not delinquent on the student loan payments and the monthly payments do not cause excessive debt-to-income ratios, you can still get a mortgage.

Can I buy a home without my spouse?
A common question is if you can buy a house without your wife or husband.  The short answer is yes. There are numerous reasons someone may want to exclude their spouse from a mortgage application, such as lower credit, lack of job history or income, or one spouse having excessive debt that could prevent an approval. You may be able to qualify and get a home loan without your spouse.

Can I buy a home after foreclosure?
Most loan programs will require you to wait 3 years before you can buy again after a foreclosure.  There are some instances that you might be able to get an approval in as little as 12 months.  This includes the FHA extenuating circumstances program (more commonly known as the “FHA back to work program”).  If you lost your job due to a job loss or some other event out of your control, you might be able to purchase a home with a FHA loan after only 1 year.

Have more questions about buying your first home?  Give us a call at 1-800-731-3560.

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