Tips and resources for first-time homebuyers

DENVER – Buying a home is one of the biggest financial decisions you’ll make in your life, and it can be a stressful one.

Doing lots of research ahead of time can take a lot of the pressure off. To help you out, we’ve compiled some resources that will help make the home-buying process less intimidating (and maybe even more affordable than you thought).

RELATED: In Denver’s tight housing market, does it make more sense to rent or buy?

How much can I afford?

Before you start shopping around, you probably want to figure out how much you can afford for a house. Maybe you’re looking for something that’s the same price or cheaper than what you’re currently renting, or you want to know how much you need to save up for a down payment.

Websites like Bankrate offer mortgage calculators that allow you to tweak variables like home price, down payment, mortgage length and interest rate to estimate how much a home will cost you each month. Play around with the numbers to see how they change your estimated payment. Keep in mind that these tools might not include other costs of home ownership, such as insurance, property taxes and homeowner association fees.

You might also check with your bank or credit union or consult a financial adviser who can look at your assets, debt and overall financial situation to determine what you can afford.

Making a down payment

One of the biggest hurdles to buying a home is coming up with a down payment. Mortgage lenders conventionally want about 20 percent of the purchase price down, but coming up with that kind of money isn’t easy for a lot of people.

Thankfully, there are a lot of resources out there to help with down payments.

Local governments at the state, city and county levels usually offer homeowner assistance in the form of grants and other programs. A good starting point is the Colorado Housing and Finance Authority. You’ll also find a list of resources on the U.S. Department of Housing and Urban Development’s website.

FHA Loans
An FHA loan is a federally-insured home loan that allows lenders to offer a better deal, such as a lower down payment and lower closing costs. FHA loans are also easier to qualify for because they’re less restrictive in regard to things like credit score and debt-to-income ratio. With an FHA loan, you can make a down payment as low at 3.5 percent.

FHA loans can be used in conjunction with other forms of down payment assistance, so you could end up with no down payment at all, or just paying closing costs, depending on what you qualify for.

Read more about FHA loans on the HUD website.

VA loans
These loans, like FHA loans, are provided by private lenders but partially guaranteed by the U.S. Department of Veterans Affairs. They often require no down payment at all. Buyers must meet specific service requirements in order to qualify. 

Read more on the VA’s website.

USDA-backed loans
If you’re looking for a home in a rural part of the state, you might look into a loan backed by the U.S. Department of Agriculture. Buyers must meet certain criteria, including income requirements.

Learn more on the USDA website.

Where can I afford to buy?

The internet has made it easier than ever to find homes in your price range. Websites like Zillow, Redfin and Trulia are some of the more popular options and can give you a good idea of which cities or neighborhoods have homes you can afford.

RELATED: These five neighborhoods are great options for first-time homebuyers

Neighbor Next Door program
If you’re a law enforcement officer, firefighter, EMT or teacher, you might qualify for HUD’s Neighbor Next Door program, which offers discounts of 50 percent off the list price of homes in certain areas that are slated for revitalization.

RELATED: Denver home prices, then and now: Where you can still find a home for $250K

Finding a real estate agent

A great real estate agent can help immensely in the home-buying process. They should work for you and help guide you through the process, easing your fears and making the whole undertaking a little less overwhelming.

If you’re just starting out, check with friends, family, neighbors or coworkers who have recently purchased a home to see if they worked with an agent they would recommend. Then, do your research. What are the agent’s credentials? How long have they been in business? What kind of homes do they usually work with? Do they line up with what you’re looking for?

Finding a mortgage lender

When searching for someone willing to give you a loan, you might start with the financial institutions you already have accounts with. The bank or credit union where you have your checking and savings accounts might offer special deals or lower rates than you can find elsewhere.

Otherwise, major banks and other financial institutions like Fannie Mae and Freddie Mac have lots of experience providing mortgages to first-time homebuyers. Some lenders might even offer loans tailored for those with bad credit or other special circumstances. Financial website NerdWallet has lots of resources that can help you narrow your choices down.

If you prefer to do your business online, lenders like Rocket Mortgage make it easy to apply and get qualified for a loan from your smartphone or computer.

Whatever you do, shop around to make sure you’re getting a good rate and a reliable lender.