Buying a house and qualifying for a purchase loan can be a nervous time for first time home buyers, but if you prepare yourself it is possible to have a pleasant experience. Home prices have fallen considerably and home loan interest rates remain at record lows, so the timing could not be better.  The fact is that in 2011 we have seen the best fixed mortgage rates of our lifetime.

Getting a pre-approved mortgage is the important qualifying procedure in which the underwriter will review your credit history, income and monthly obligations in an effort to determine your debt to income ratio. It is important to get a home loan approval before making an offer on a house, because sellers will consider your offer to be stronger if you have already been pre-approved by a bank or lender.

You should know that government loans, like the FHA mortgage requires a monthly mortgage insrance payment. When figuring out your budget you need to make sure you are considering the mortgage payment, mortgage insurance payment, property taxes.  One significant benefit is that you will be able deduct the interest on your mortgage for tax purposes.

Qualifying for a first time home buyer loan can be challenging but again being prepared and working with the right lender is an important first step.

1. Know your credit score before shop mortgage lenders online.
2. Save money for the down-payment of the home purchase loan.
3. Use a mortgage calculator to determine how much you can afford to spend on a new house.
4. Compare conventional and FHA loans for first time home buyers.
5. Consider the pros and cons of an ARM versus a fixed rate mortgage.
6. Get a mortgage pre-qualification with a letter from a credible lender.
7. Make sure there is no pre-payment penalty with home loan you choose.

Homeownership offers many financial benefits but in most cases there will be new costs that you must account for. Before committing to a buying a house you should get a home inspection and make sure that you are emotionally and financially prepared for being a homeowner.

There are a few borrowers who have figured out that there are many benefits with first time homebuyer loans. When you initially become excited at the prospect of buying a home, you may have rose colored glasses on.  As soon as you take those off, however, you will come to realize that had better look into viable home finance opportunities before you get in over your head.  You need to make sure you have enough financing to fund the purchase of the home you want.  Fortunately, there are two prominent first time home buyer loans that could serve you well.  They are called an FHA home finance and a conventional purchase mortgage.

An FHA home finance is made available by the Federal Housing Administration.  The government funds these 1st time home buyer loans to help Americans purchase their first house.  The initial advantage of an FHA home loan is that it does not have strict requirements to qualify.  This is made possible because you will have private mortgage insurance to cover you in case you are unable to make your payments.  Also, the very reasonable 3.5% down-payment helps prospective homeowners to be better able to afford this large purchase.  Closing costs are fairly low, there are no penalties for making payments early, and the more lenient underwriting makes this one of the best home finance opportunities for first time home buyers.

A conventional purchase mortgage is another option.  If you have a great credit score and a little more money saved up, this could be a great option for 1st time home buyer loan program.  You are not required to have private mortgage insurance with this option, so the underwriting is stricter, requiring you to have a higher credit score.  Also, there is a required 10 to 20% down-payment with a conventional purchase mortgage.  After you make the 10 to 20% down-payment, the interest rates you are charged will depend on your credit score and current market trends.

There are advantages and disadvantages to each of these home finance opportunities, so before you make your decision between these first time home buyer loans, it would be in your best interest to speak with an expert who can assess your current financial and credit situation along with market trends that determine interest rates.  While you may want to only pay a 3.5% down-payment with the FHA home finance options, you may want to avoid having private mortgage insurance, which is only possible with a conventional purchase mortgage.  Whatever you choose, you will soon be in the home you have always wanted.