The 3 Largest Obstacles to Buying Your First Home - And How to Overcome Them

Most people are familiar with the biblical story of David and Goliath. A teenage boy, against all odds, unprotected and with merely a slingshot, defeats a huge soldier of a man who is fully equipped with the latest armor and weapons of his day, and completely seasoned in the art and intricacies of war. To everyone except David himself, it seemed an impossible task.

But what seems impossible, oftentimes isn't.

Here are the 3 largest obstacles that face every potential first time home buyer. While they may seem impossible, in actuality, you can overcome them.

1. Saving for a down payment. With a conventional mortgage loan, the borrower typically has to put down 20% of the purchase price (the down payment) and the lender will finance the remaining 80%. On a very modest home costing $150,000, this down payment equals $30,000. That can be a huge sum of money for many families. In a two-income household, if both wage earners work in a retail-type job, say for a big-box store, saving that much money would take years and years, and buying a home would indeed be almost impossible.

There are, however, solutions to this problem. Most states are aware of the financial struggles that first time home buyers go through, and have created agencies to assist with the problem. Many states provide outright grants for low to moderate-income people. These grants provide them with the money they need for a down payment. Other states provide very low-interest loans for the purpose of helping the borrower obtain the funds needed for a down payment. Some states will even forgive the loan if you remain in your first home for a length of time.

With this type of help, the down payment is no longer a Goliath of an obstacle. Depending upon the state and the program, buyers can purchase their first home with as little as $500 for the down payment anc closing costs. Nearly anyone who has a job, regardless of pay rate, can save that amount.

2. Develop a credit score of 580 or more. Maybe you have a bad credit history, or none at all. Either way, this obstacle is not impossible to overcome. While it will take some time, within several months you can make solid improvements in your credit score. A credit score of 580 represents the lower end of "fair" credit and is not very difficult to obtain. How to improve your credit score is beyond the scope of this article, but you can get much more detailed information by searching for "improve credit score" in your favorite search engine.

3. Have 2 years of stable employment. If you have a pattern of changing jobs every few months, you'll need to adjust that habit, even if it is temporary. While changing jobs once in a two-year period to obtain a better pay rate and more responsibility is acceptable to lenders, you'll need to show evidence of a responsible work ethic. Even if you are self-employed, the lender is going to want to see your tax returns for the last 2 years. It goes without saying that the lender is only going to make the loan if he feels confident you will have both the desire and ability to pay it back.

An unstable track record at your job will greatly hinder your ability to get a mortgage loan. It will certainly call into question your ability to steadily and consistently repay the loan over the next 30 years. If necessary, stick with your present job until after you buy your first home. Do all that you can to get raises and promotions during that time, even if you dislike your boss. It will be worth the effort. Once you buy your first home, then you can make career changes without hindering your ability to qualify for a mortgage.

While there are other obstacles that you'll face in your quest to buy your first home, conquer these three, and you will be 95% of the way towards your goal.

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Greg Roy is a widely recognized construction and real estate expert. Through his website first-time-home-buyer-s.com he has helped countless numbers of first time home buyers learn how to turn their dream of home ownership into reality.