While the prospect of owning your first home is exciting, it's also natural to feel some trepidation, especially when going through the mortgage process. At Heritage Family Credit Union, we've helped many families achieve their goal of homeownership, and we're here to support you every step of the way. This guide will equip you with the knowledge and resources you need to better understand mortgage financing. With our personalized approach, competitive rates, and wealth of resources, we'll empower you to make informed decisions throughout the homebuying experience.

Building Your Foundation: Financial Preparation for Homeownership 

While buying your first home is a multi-step adventure, understanding the basic roadmap can ease some anxieties. It all starts with your finances, and we’ve come up with three important steps to prepare you financially for the journey toward homeownership.

STEP 1 | Save For a Down Payment

While you may have heard that 20% is considered ideal for a mortgage down payment, there are many loan options available that require far lower down payment amounts, such as 5%. Regardless of the amount you choose, saving for a down payment significantly reduces the overall cost of your mortgage by lowering the loan amount you need to borrow. HFCU offers a variety of savings tools and resources to help you reach your down payment goals.

Step 2 | Focus on Your Credit Score 

Your credit score is a significant factor in obtaining a mortgage and securing a favorable interest rate. Lenders use your credit score to assess your financial responsibility. Generally, a higher credit score translates to better loan options and lower interest rates, saving you money in the long run. Here are some general tips to improve your credit score before applying for a mortgage:

  • Pay bills on time consistently. This is the most critical factor influencing your credit score.
  • Maintain a low credit utilization ratio. Keep your credit card balances well below their limits.
  • Review your credit report regularly. Look for errors and dispute them if necessary.
  • Limit credit applications. Avoid opening new lines of credit unless absolutely necessary.

By taking these steps to improve your credit score, you'll be well on your way to achieving your dream of homeownership.

Step 3 | Budget For Your Home

Owning a home goes beyond the monthly mortgage payment. While creating a realistic budget for your regular expenses is essential, factoring in additional costs like property taxes, homeowner's insurance, and potential maintenance helps you paint a clearer financial picture. A comprehensive budget allows you to determine a comfortable monthly payment, ensuring you shop for homes within your budget and avoid unexpected financial strain.

Finding Your Mortgage Match: Loan Options for First-Time Buyers

There are numerous options for first-time homebuyers to explore. Some programs are offered nationwide while others are tailored to Vermonters. Our supportive staff will walk you through the available options so you can choose the best loan for your financial future. 

Conventional Loans

A conventional loan is the most common type of mortgage for first-time homebuyers. These private-sector loans follow guidelines set by Fannie and Freddie Mac. Borrowers can choose between 15-, 20-, and 30-year repayment options. Conventional loan benefits include:

  • Low down payment
  • Stable interest rates
  • Appealing to sellers
  • No upfront mortgage insurance

USDA Loans

USDA loans are a government loan that is insured by the U.S. Department of Agriculture’s Rural Housing Program. It helps low- and moderate-income homebuyers acquire property in eligible rural areas. Other USDA loan benefits include:

  • No down payment

  • Low mortgage rates

  • 100% financing

  • Reduced monthly mortgage insurance

Jumbo Mortgage Loans

Jumbo loans, also called non-conforming loans, are tailored for mortgages that exceed the conventional lending limits. Jumbo loans offer additional benefits:

  • You can borrow more than a conventional or government-backed loan.
  • Competitive rates and more favorable terms for loan amounts.

VHFA Loans

VHFA Home Mortgage Loans are designed for low- to moderate-income residents of Vermont. This home loan program is ideal for first time homebuyers in Vermont who might not otherwise be able to afford a mortgage. 

  • Competitive interest rates
  • Low down payment
  • Savings on Vermont Transfer Tax at closing
  • Down payment and closing assistance
  • Annual federal tax credit available

Why Choose Heritage Family Credit Union for Your Home Loan?

At Heritage Family Credit Union, we know that buying your first home is a momentous occasion. That's why we're committed to making the mortgage process as smooth and low-stress as possible. We're not just a lender; we're a trusted partner on your homeownership journey. Here's what you can count on when you choose HFCU for your home loan:

  • Competitive Rates. We offer competitive rates and flexible loan options to help first-time homebuyers obtain a mortgage that fits your budget.
  • Local Personalized Service. Our dedicated mortgage specialists will guide you through every step of the process, answer your questions, and ensure you feel confident and informed throughout your first home buying venture. Our lending, processing, and servicing teams are all local to Vermont, so when you have a question at any stage in the process, you'll be assisted by someone who knows our area.
  • Tools and Resources. We offer a variety of resources and tools to guide you through each step of the home buying process including an application checklist, a mortgage road map, and rate search tools.
  • Community Focus. As a local credit union, we're invested in the communities we serve. We believe in supporting our members and helping them achieve their financial goals, including homeownership.

When you’re ready to take the next step, contact a HFCU Mortgage Lender to schedule a personalized mortgage consultation. Together, we'll turn your dream of homeownership into a reality.