First-Time Homebuyer? How to Overcome 4 Common Mortgage Fears
The homebuying process is often a rollercoaster of conflicting emotions. There’s the excitement of finding a place of your own, the worry of making the wrong choice, and the anxiety of having your financial life laid bare in front of a lender.
However, buying a home and applying for a mortgage doesn’t have to be overwhelming.
“People are hesitant to apply for a mortgage because that requires running your credit and handing over all your financial documents,” said Monica Engle, a real estate agent with RE/MAX Premier Properties in Independence, Mo. “That’s why it’s important to find a lender you trust and will guide you through the process.”
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1. My credit score is too low to buy a home
Three little numbers can mean quite a lot when they are your credit score. Generally, the higher your score, the more likely you are to qualify for a mortgage with lower interest rates.
And there are some simple steps you can take to boost your score.
“Paying credit cards down and getting added as an authorized user on a parent’s card can boost that credit score,” said Matina Geanopoulos, a loan advisor with New American Funding in Agawam, Mass.
“I tell clients during the preapproval process not to open a new credit card or buy a car,” said Geanopoulos. “But if you have to do that, let your loan officer know right away. It will affect the loan process.”
Even if your credit score isn’t as high as you hoped, you may still be able to purchase a home.
Buyers with credit scores of at least 580, or even lower in certain circumstances, may be able to qualify for a Federal Housing Administration (FHA) loan with as little as 3.5% down.
2. My down payment isn’t large enough down payment to buy a home
First-time homebuyers may assume that a 20% down payment is the norm. But the magic number is actually much lower.
The typical down payment for first-time buyers was 10% of the sale price of the home in 2025, according to the National Association of Realtors. For an FHA loan, buyers only need a 3.5% down payment, while borrowers may be able to put down as little as 3% for a Conventional loan.
And those using Veterans Affairs (VA) loans and U.S. Department of Agriculture (USDA) loans may be able to not make a down payment at all.
“Of course, 20% down is great because you can avoid premium mortgage insurance (PMI),” Engle said. “But if you’re not selling a house and using those proceeds, 20% is a really large number for an average [home] in today’s market.”
Geanopoulos said that down payment assistance programs can be a great resource for those looking to boost their funds. She’s seen some first-time homebuyers purchase their first home with as little as $1,000 out of pocket by using these programs.
3. My income isn’t high enough to buy a home
Unfortunately, some buyers may not earn enough to afford the home they want. Getting a side hustle or second job can help increase your income and improve your debt-to-income ratio.
But to have it considered in your mortgage application, you must have worked at the job for at least a year or two, said Geanopoulos.
If you don’t have time to wait, adding a cosigner can help you qualify while you build cash and establish employment history with your new side gig. Increasing your down payment can also help advance your application.
4. I don’t have traditional employment, so I can’t buy a home
Is it possible to buy a home if you’re a small business owner, gig worker, contractor, or freelancer? Absolutely.
Self-employed workers who use a 1099 tax form, instead of an employer-provided W-2 form, often can use past tax returns to quantify their income. This helps lenders get a fuller picture of your financial standing.
They may be able to qualify for non-qualified mortgages, often known as non-QM loans.
Generally, a few years of tax returns are required as well as a Schedule C form that shows business income.
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