You’re fresh out of college and you want to buy your first home. But how? That’s what my Millennial Daughter, Rachel wants to know.
To get some answers, I sat down with one of our preferred lenders Jenni Sherman from Summit funding.

Jenni.Sherman@SummitFunding.net
HOW TO BUY YOUR FIRST HOME FOR MILLENNIALS
Unless you have a rich uncle and can pay cash, it takes at least 4 things to get into that first home:
Credit
You’ve must have at least a fair credit score in order to finance the purchase of a home. One loan I like a lot and will talk about more is an FHA loan.
Your FICO score must be at least 620 to qualify for an FHA loan. A higher score is better. FHA isn’t really a score-dependent loan, but if you’re score is over 700 you may qualify for a slightly better rate.
Conventional loans require high scores for the best rates.
If you’re young, you may not have much of a credit score. Unfortunately, to build your score you have to have credit. If you have always been super responsible and paid cash for everything, have never used credit – your score will… suck. Yes, they punish you for being smart with your money, but thats how it works. Lenders want to know that you can use credit responsibly.
So, you’ve got to get some credit. Easiest way to start is to get a credit card. Do a little research, find one with low interest that doesn’t have annual fees, and get one. Use it and pay it off every month! Don’t use it unless you have the money to pay it off. I’m not giving you license to go buy a new MacBook you can’t afford. And I love Apple.
Credit bureaus like you to have multiple TYPES of loans – a credit card is a revolving loan – meaning you can charge something, pay it off, and charge it again over and over again.
Another type of loan is an installment loan – that’s a loan with fixed payments for a set period, such as a car loan. It might be worth getting a SMALL installment loan to help bump your credit over time. Here’s a smart idea: Put a lot of money down on a modest car and finance the balance for 36-48 months. If you put a lot down, the payment will be small and the amount of debt will be small. THIS IS ALSO IMPORTANT! You’ve got to keep your debt to income ratio low – I’ll talk about that in a minute.
OK, so you’ve got a credit card that you pay off every month, and a car loan, with a small payment and a small balance. What are the main factors that determine your credit score?
Biggest Factors
Make you payments on time – this is massive. NEVER make a late payment.
Credit Card Utilization: If you have a card with a $10,000 limit and keep it maxed it, this will hurt your score. The good news is, pay that baby off and your score will take a huge leap upwards.
Don’t get sued – if you have judgements or collections filed against you, it’ll hurt your score
Moderate Impact
The length of your credit history has a moderate impact. Start now if you haven’t already so you can get some years under your belt.
Low Impact
Number of accounts – doesn’t matter a ton, but more accounts paid on time bumps your score.
Inquiries – The credit bureaus don’t like to see you applying for credit every five minutes. Only apply when you absolutely have to.
This is REALLY important: If you’re at that point where you’re about to buy a home DON’T APPLY FOR ANY CREDIT! If you go finance a new car with an $800 a month payment right before you apply for a home loan, that may kill your chance of getting a loan!
There’s an app I use to track my credit score. It’s not 100% accurate – since there are several credit bureaus and everyo...