Embarking on the journey of first-time homeownership is a significant milestone, especially in the picturesque state of Idaho. From the bustling streets of Boise to the serene landscapes beyond, there are plenty of places that many feel lucky to call home. To expand this opportunity to everyone, we’ve made this guide to help others navigate the complex process of buying a house in Idaho. We’ll dive deeper into the requirements, your different mortgage options, and different assistance programs that may be available to Idaho residents.
The Basics: Understanding First-Time Home Ownership in Idaho
Before first-time owners proceed in the home-buying process, they must understand the term “first-time home buyer.” Sometimes, you’ll have more lending options available as a first-time home buyer, as several government programs and lending grants can assist people who cannot afford housing through traditional lending options.
What Are the Requirements for First-Time Home Buyers in Idaho?
As the name implies, you must not have owned a primary residence within the last three years to be qualified as a first-time home buyer. However, there are exceptions. For example, if you’ve only owned a house with a spouse, you may be qualified as a first-time buyer if you are displaced and seeking homeownership afterward.
You must also reach these benchmarks:
- Be under income limits that pertain to specific programs, which can be 80% AMI for the area you will be living in;
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Have a credit score of at least 620;
- Have debt-to-income requirements which can vary from 38% to 45%.
Specific first-time buying programs may have additional requirements, which is why taking homebuyer education courses is so important. For example, a USDA first-time buyer loan may only be available if you plan on buying a property in a rural area.
What Is a Good Credit Score for First-Time Home Buyers?
To obtain a loan, you must meet minimum credit score requirements. A credit score is based on your financial history, and it factors in any debts you may have and how reliably you pay off these debts and other bills. It often indicates to lenders that you are a responsible recipient and will eventually be able to pay back future loans. In their eyes, a high credit score shows lenders you are a trustworthy investment.
The actual credit score requirements may differ depending on the lender and the type of loan you’re seeking. For instance, the average homeowner’s credit score was 768 in 2022. Conventional loans will typically need a credit score of 660 or higher; government loads (like FHA) may require a score of at least 620. This ultimately helps first-time buyers who may not have enough credit history to qualify for a traditional loan.
If you’re trying to raise your credit score, follow these steps:
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Check your credit score: You can check your credit score with your credit union or bank or sign up for a free annual review at annualcreditreport.com.
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Build credit history: If you’ve never had a credit card or never taken out a loan and paid it off, you likely have a low credit score due to minimal history. Once you build your history by getting a credit card or paying off loans responsibly, your score will rise with time.
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Pay your loans and bills on time: Whether you have a payment for a credit card, rental housing, a car loan, or a student loan, you must pay them on time. Otherwise, your credit score will decrease. Many loan services will establish a payment plan or direct deposit to ensure you can pay your loan on time regularly.
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Don’t reach your credit limit: Even if you have a smaller credit card with a minimal credit limit. Keep your balance below 30% of your credit limit.
Following these steps can mark a significant milestone in getting your first house.
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Ready to start your journey? Take a first step and schedule a free Pre-Purchase Coaching session.
