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First-Time Home-Buyer Class: What to Know and Do You Need to Take One?

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You can take a cooking class to be a better home chef or a computer class to grow your job skills. But what about a first-time home-buyer class? Here, we'll discuss what these classes entail and help you figure out if you need one.

What is covered in a first-time home-buyer class?

A first-time home-buyer class is a course featuring content developed by the U.S. Department of Housing and Urban Development. The purpose of these classes is to help first-time buyers navigate the world of mortgages and understand what homeownership really entails.

A home-buyer education course will typically cover topics such as:

For example, there are many different types of mortgages you can apply for. Going to a class that helps you find the right loan type for you can save thousands of dollars. As a quick overview:

  • A conventional mortgage typically requires a minimum credit score of 620 and a minimum down payment of 20%, though some lenders will accept a lower down payment.
  • An FHA loan lets you buy a home with 3.5% down and, in some cases, poor credit. You can check out this first-time home-buyer's guide to FHA loans to learn more about them.
  • A VA loan lets you buy a home for 0% down if you're a U.S. military veteran or the surviving spouse of a veteran. You can look at this list of VA lenders to find out what offers you qualify for.
  • A USDA loan could be a good fit for you if you're buying a home in a rural area and are a low-income applicant with no money for a down payment.

Of course, a first-time home-buyer class will go into these loans in more detail.

Do I have to take a first-time home-buyer class?

Some lenders require mortgage borrowers to take a home-buyer education class. But even if you don't need counseling to buy a home, it could still pay to take a first-time home-buyer class. Doing so could make the process of applying for a mortgage a lot less stressful.

A home-buyer class could also help you figure out what loan program is right for you and what your housing expenses outside of your monthly mortgage payment might look like. That education could come in really handy not only when you search for a home and apply for a loan, but when you're ready to close and take ownership of a property you'll be responsible for maintaining.

Do any mortgage loans require a first-time home-buyer class?

Home buyers who want to participate in a state-sponsored home-buying assistance program are generally required to enroll in a first-time home-buyer workshop. There are also some specific loan programs that typically require borrowers to participate in a home-buyer education course:

  • The Freddie Mac HomePossible loan allows qualified first-time home buyers to get a mortgage with just a 3% down payment. To be clear, the program isn't limited to first-time buyers only, but first-time buyers do typically need to participate in a home-buyer class.
  • The Freddie Mac HomeOne loan also allows qualified first-time buyers to purchase a home with just a 3% down payment. For this program, at least one mortgage borrower must be a first-time buyer.
  • The Fannie Mae HomeReady loan allows qualified buyers to get a mortgage with a 3% down payment, and borrowers can also qualify without a credit score. First-time buyer classes are a must for those who have never owned a home before.

How to find first-time home-buyer classes near you

A good way to find a first-time home-buyer class is to reach out to the state housing agency where you live and see if it offers a first-time buyer assistance program. Generally, that agency will be able to provide you with course options and locations that are local to where you live.

Another option is to search for an online home-buyer education course. The upside of taking this type of course is that you can do so from the convenience of your own home. Not only that, but many online home-buyer classes aren't live, but rather, are pre-recorded. That means you can go through these courses at your own pace rather than have to sit through an entire course without a break. Given that online home-buyer courses can be six to eight hours long, that's a good thing!

First-time home-buyer classes range in price. You might find one for as little as $15 to $30, or you might pay closer to $100. The upside, however, is that you might learn a lot about the home-buying process, as well as the mortgage application process, and that alone could help you make smart decisions. Buying a home is a huge step and one every buyer should make armed with knowledge. If you feel that you're going into the process blindly, then a first-time home-buyer class could be a very worthwhile investment.

Still have questions?

Here are some other questions we've answered:

FAQs

  • You may need to take a first-time home-buyer course in order to buy a home. Some specific loan programs require this type of class, and you can count on having to take one if you're applying for a state-sponsored home-buying assistance program. But even if you're not required to take a first-time home-buyer course, it could pay to sign up for one anyway. That class could teach you about different loan products and help you figure out how much house you can afford -- points of information that will make the home-buying process less stressful.

  • A first-time home-buyer class is basically a crash course in all things related to buying a home. In one of these classes, you'll learn about different types of mortgages (for example, conventional loans versus FHA loans versus USDA loans), how to figure out your home-buying budget, what expenses come with homeownership, what to look for in a home, and what requirements you need to qualify for different types of mortgages.

  • You can find a local (in-person) first-time home-buyer class through your state housing agency that offers first-time buyer assistance programs. An easier option, however, may be to search for a first-time home-buyer course online. That way, you can take that class at your convenience and at your own pace, since many online classes aren't live, but rather, are pre-recorded.

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