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A common renter’s dream is to finally buy their first home and enjoy their space with friends and family. While this might be a dream straightforward, qualifying for your dream home this is not. Here is a guide on how renters can qualify to buy a home and a secret method that allows you to buy a home quicker.


Review Your Credit Report

Reviewing your credit report will show you your credit score and any derogatory items on the report. Purchasing a home with a mortgage will need a strong credit report. Generally speaking, the stronger your report is, the lower your mortgage rate will be. Viewing your credit report as soon as possible will give you more time to remove any negative items, such as debts and personal liens.

You should look out for incorrect employers, incorrect phone numbers and addresses, false personal information, late payments, and signs of identity theft on your credit reports. You can dispute these inaccuracies by contacting the credit bureau directly by phone, online, or mail.

Dispute your credit report: TransunionExperian, Equifax.

Here are a few tips to improve your credit score

  1.  Pay off your credit card debt: Your credit utilization ratio is the amount of available credit you’re using. It also accounts for 30 percent of your FICO score. Paying off your credit card debt can dramatically improve your score in a few months.
  2.  Limit the number of credit cards you own: Opening up new credit cards will reduce your credit score. This is because credit bureau’s evaluate your score based on how risky you are. Opening a new credit card will negatively affect your scores.
  3.  Pay bills on time:This one is a no-brainer. If you pay medical, insurance, rent, and credit card bills on time, you will be at less risk in the eyes of the lender. Having a clean track record with zero delinquent payments will improve your credit score and can qualify you to buy a home quicker.

Be aware that improving your credit report will take time. The sooner you view your credit report, the sooner you have improved it.


Down Payment Options

Most home buyers cannot afford the entire asking price for a home, therefore, home buyers apply for a home mortgage by submitting a down payment. A down payment is the funds required for the initial payment when purchasing a home.

The amount of the down payment needed depends on the type of home mortgage loan you receive.

Here are the down payment requirements for all home mortgage variations:

  •  Conventional Loans – 5% – 20%
  • Fannie Mae and Freddie Mac Conventional 97 – 3%
  • FHA Loans – 3.5 percent with a 580 credit score
  • VA Loans – No down payment
  • USDA Loans – No down payment
  • 203k Loans – 3.5 percent


Types of First-Time Home Buyer Loans Available

Now that you know the home mortgage loan rates available, you should be aware of what each home mortgage loan is.

Conventional Loans:

  • A conventional loan is when you have at least 20 percent down payment available. Interest rates may vary depending on your income level and credit score. These are the lengths and rates for an average conventional loan. Please note that these numbers do change from day-to-day.
  • Mortgage length: 30 year
  • Rate: 4.375 percent
  • Zero points

FHA Energy Efficient Mortgage (EEM):

  • The Energy Efficient mortgage program helps borrowers finance their home while receiving additional funds for energy efficient improvements.
  • Mortgage length:30-year loan
  • Rate: 4.0 percent
  • Zero points

VA Loans:

  • VA loans solely apply for Veterans who qualify for this type of loan. It requires zero down payment or mortgage insurance. This is the most affordable mortgage available today.
  • Mortgage length: 30-year loan
  • Rate: 4.0 percent
  • Zero points

USDA Loans:

  • The USDA mortgage program is set up through the US Department of Agriculture that helps low-income home buyers in rural areas save money on home mortgages. Depending on the city you are purchasing a home in, you may qualify for a USDA loan with no down payment and a low mortgage rate of .35 percent.
  • Mortgage length: 30-year loan
  • Rate: 4.24 percent
  • Zero points 

203k Loans:

  • 203k loans are renovations FHA loans for homebuyers looking to purchase a fixer-upper property and fund the cost of repairs needed for home improvement.
  • Mortgage length: 30-year loan
  • Rate: Varies by county
  • Zero points

Fannie Mae and Freddie Mac Loans:

  • Fannie Mae and Freddie Mac loans are the two largest mortgage loan quasi-government agency. They accounted for 60 percent of apartment property loans in 2017. Both have been set up to make mortgage lending more affordable for the average home buyer.
  • You can work with a loan broker who will broker a loan with a lender who follows Fannie Mae and Freddie Mac guidelines.
  • Fannie Mae and Freddie Mac packages these loans and sells them to large investors such as other countries and institutional investors.
  • Homebuyers cannot work directly with Fannie Mae and Freddie Mac. They must go through a loan broker and agency.


Getting A Pre-Approval Letter

A pre-approval letter is like a resume for a home. To get a pre-approval letter, you will need to speak with a loan officer who will analyze your credit report, verify your income, W2’s, tax returns and bank statements. This usually will take a matter of minutes.

Here are the documents needed to get pre-approved:

  • 2 years of federal tax returns
  • W2’s
  • 3 months of paystubs
  • 2-3 months of bank statements
  • Proof of down payment

This pre-approval letter will summarize your current financial standing and eligibility for a home loan. To be taken seriously by realtors, carry this pre-approval letter with you when you are house hunting and visiting open houses. Be aware that preapproval letters do not guarantee a mortgage or a home. 


Solution: Join the Poplar Program

If you’re renting now but planning to eventually buy a home, burning 35 to 50 percent of your income each month on rent does not always feel like the best way to save for your future. In a traditional rental situation, you will never see a penny of your rent come back to help you in the future. Instead of building equity in a home you own, you get short-term convenience at a steep price.

Poplar Homes is pioneering a new way to rent with the launch of a first-of-its-kind product named “Poplar Street”. When you sign up for Poplar Street, you can earn 20 percent back on each month’s rent payment as a credit towards buying your first home. By saving a portion of your rent for a future home purchase, you get the convenience of renting plus the tools to build equity in your future home purchase.

Get early access to the Poplar Street below to be the first to know about homes enabled with the program or to convert your current rental to a Poplar-enabled home.


Start saving for your dream home

Move into a Poplar Home and earn back 20% monthly rent for a future home.