A happy family of three, holding an "Our First Home" sign outside their new home, representing first-time home buyers.

Dreaming of owning your first home in Denver? You’re not alone. With the city’s vibrant neighborhoods and competitive housing market, securing a first-time home buyer loan can help you take a big step towards that goal but what does it take to qualify?

Here’s what you need to know to start your journey toward getting a residential home loan and making homeownership a reality.

Credit Score: The Foundation of Your Approval

One of the first things lenders look at when you apply for a first-time home buyer loan is your credit score. In general, a score of 620 or higher will make you eligible for many loan programs.

However, FHA loans, which are popular among first-time buyers, may accept scores as low as 580, and even 500 in some cases, with a higher down payment. It’s important to check your credit score before applying and consider taking steps to improve it if needed.

Down Payment Requirements

For first-time home buyers, the down payment can be a major hurdle. Fortunately, you don’t necessarily need to put down 20%. Many first-time home buyer programs, such as FHA loans, only require a 3.5% down payment if you meet the credit score requirements.

Other options like VA home loans and USDA home loans may offer zero-down payment programs if you qualify based on military service or property location, respectively.

Income and Debt-to-Income Ratio

Lenders will closely evaluate your income and debt-to-income ratio (DTI). The DTI measures how much of your income goes towards paying debt every month, including your potential mortgage payment.

A DTI of 43% or lower is typically preferred for most first-time home buyer loans. Having a steady income, job history, and low debt levels will make it easier to qualify for residential home loans in Denver.

Employment History

Consistent employment history is also key. Lenders usually prefer applicants who have been with the same employer for at least two years. If you’ve recently changed jobs but are in the same field, you may still be considered, as long as there’s no gap in your employment history.

Proof of Assets

When applying for a first-time home buyer loan, be prepared to show proof of assets such as savings accounts, investments, or gifts from family members that will be used toward the down payment and closing costs. This shows lenders that you have the funds needed to close the deal and handle initial home ownership expenses.

Concept of buying a home with residential home loans.

Need Help Getting Started?

The first-time home buyer process can feel overwhelming, but you don’t have to go it alone. At Clear Path Home Loans, we make the process of securing residential home loans as simple as possible. Our team will guide you through each step and help you find the right program for your situation.

Ready to take the first step toward owning your Denver home? Contact Clear Path Home Loans today to see how we can make your home ownership dreams a reality!