Insights for First-Time Home Buyers, Part 2: Qualifying

by Liza Deckelbaum


Buying your first home is a big decision, especially if you are concerned with whether or not you might qualify for a mortgage*. If you feel this way, you’re not alone. Many first-time home buyers fear that their credit will be too low or their debt too high.

In fact, Inman reports that more than 54 percent of people who said they wanted to buy a home within the next two years hadn’t applied for a mortgage because they were afraid they wouldn’t qualify.

In the second installment of our “Insights for First-Time Home Buyers” series, we’re going to discuss why qualifying doesn’t need to be scary and how Coastal could make buying your first home a breeze.

The first step in applying for a mortgage is deciding which financial institution or lender you’ll use. Something that most people don’t know is that credit unions are often a much better option for mortgages compared to big banks.

This is because credit unions can typically give you lower rates and are usually more flexible when it comes to qualifying. And, you'll always work with your friends at Coastal because they will never sell your mortgage to a far-off megabank.

Not to mention, Coastal doesn’t require Private Mortgage Insurance (PMI) for first time home buyer loans, saving you hundreds of dollars each year. There is an underwriting fee of just $400*, but there are no charges for document preparation or credit reports, which means more substantial savings for you.

Did you know that with Coastal’s first time home buyer mortgages, you can finance 100% of your home’s purchase price? That means a down payment might not be required.

However, increasing your down payment will allow you to increase the price of the home you can afford. Your debt-to-income ratio is the most limiting factor on the price of a house you can purchase.

Your ability to qualify for a first-time home buyer mortgage is based on three key factors. First is loan-to-value ratio (LTV), which represents the ratio of the loan amount to the value of the home. Lenders ideally want to see an 80 percent LTV, meaning a 20 percent down payment is usually preferred, but not necessarily always required.

The next factor is housing ratio, which represents the percent of your total income that goes toward housing expenses. The third factor is debt-to-income ratio, which represents your total debt payments, plus housing expenses as a percentage of your total income.

Lenders will typically look at these ratios as constraints, meaning once any of these ratio limits is reached, the amount of the loan will be capped.

Even if this isn’t your first house purchase, the benefits of Coastal’s First Time Home Buyer program may still be available to you as long as you haven't owned a home for the past three years.

The mortgage experts at Coastal will happily work with you to find the best mortgage plan that fits your budget. You can choose a fixed-rate mortgage of 30 year*s or an adjustable-rate mortgage with a lower interest rate that's fixed for seven years.

Try Coastal’s home affordability calculator to estimate what your specific budget can handle.

Using Coastal for your first-time home buying journey comes with more than just financial benefits; the entire Coastal team genuinely cares about the wellbeing and financial health of its members. But, don’t take our word for it.

When thought about purchasing her first home, she had a lot of the same concerns most people tend to have. But instead of worrying about qualifying, she turned to her friends at Coastal.

Maggie had this to say about working with Coastal’s team of mortgage experts:

“I have always felt they have my best interests at heart. I know they are going to look out for me. They were in the process from the very beginning. Their first-time home buyer program made it a lot less scary.”

Read more about Maggie’s home buying journey here. Want to hear from more members like her? Watch this video to learn how we were able to make their dreams of owning a home come true with the help of Coastal.

With the right guidance, the process can be easier than you think. Even if you aren’t a first-time home buyer, all of these great benefits may still be available to you as long as you haven’t owned a home within the past three years.

Get started with your journey today by making an appointment with a Coastal mortgage specialist near you or apply for a mortgage online.


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*All loans are subject to approval.

For a $250,000 loan for a term of 30 years with a 4.50% APR, the monthly payment is $1,267.00. Taxes and insurance are not included in this payment example and the actual payment obligation could be greater. All loans are subject to approval.