Also, make sure to include all the income you have. If you have any equity in any stocks or other financial accounts, make sure to mention that to the broker as well.

The more money you can put down on the loan, the more likely it is that you can get approved. FHA loans usually only require 3-5% down. They are also usually open to working with people with credit problems.

First time home buying: an exciting time

This is an exciting time. You are being treated as an adult and preparing to make the biggest purchase of your life. It is a heady experience, especially when you are told that you can get a loan for a large amount, resulting in a house that is larger than you thought you could afford. Don't let the excitement get to you. If you feel like something is more than you can afford, you should probably back off a bit. Even though there are plenty of loan programs that can help you get into a dream home, there are also plenty that can get you into trouble down the road, when you cannot make the payments.

Carefully consider home loans

Do research and carefully consider the home loans brought to your attention. Many first time home buyers find that they are offered interest-only loans to help them with buying a first home. This can be a way to get into a larger house, but it does have its drawbacks. After the first few years, you have to start making payments on the principal, in addition to the payments you have been making on the interest. So, you end up with ballooned payments and very little equity. If your income increases by that time, there’s no problem. If it does not, however, you are in trouble. Carefully consider the loan terms, and pick terms that you are comfortable with.

Starting out small

There’s nothing wrong with starting out small for your first home. In fact, it can be a good way to get a handle on the home loan process. Additionally, you can take a few years to establish your financial footing and build some equity. Then, when it comes time to sell your first home, you will be in a good position to upgrade to something grander.

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The average rate of interest on mortgage loans continues to fall and has been under 5 percent for almost all of this past year, with this recent round of rate cuts seen as the lowest for borrowers in years. The reason, many borrowers today have bad or at least less than perfect credit scores. Still a borrower with less then perfect credit an jump through a few hoops and get a fairly decen rate on a loan.