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Disclaimer

This guide is published by USA Homeownership Foundation, Inc., dba the Veterans Association of Real Estate Professionals (VAREP), and is intended solely for general informational and educational purposes. It is not legal, financial, tax, or credit advice and should not be relied upon as a substitute for professional consultation with qualified attorneys, financial advisors, or licensed housing counselors.

While VAREP is a HUD-Approved Housing Counseling Agency and a registered Veteran Service Organization, the content presented herein is based on publicly available information, commonly accepted ﬁnancial practices, and organizational experience as of the date of publication. VAREP makes no representations or warranties regarding the accuracy, completeness, or timeliness of the information. Laws, regulations, policies, and ﬁnancial products are subject to change without notice.

VAREP is a nonproﬁt 501(c)(3) organization and is not a liated with, endorsed by, or sponsored by the U.S. Department of Veterans A airs (VA), the U.S. Department of Housing and Urban Development (HUD), the U.S. Department of Defense (DoD), or any other government agency. The views and information expressed herein do not necessarily reﬂect those of any government entity.

No client-counselor, ﬁduciary, or professional relationship is created by the use of this guide or reliance on its content. Users are solely responsible for decisions made based on this material and are strongly encouraged to seek individualized advice from appropriately licensed professionals.

VAREP expressly disclaims any liability for any loss, harm, or damages arising from the use of or reliance on this publication.

Compliance and Non-Discrimination Notice

Fair Housing and Equal Access Statement

VAREP (Veterans Association of Real Estate Professionals), a HUD-Approved Housing Counseling Agency, is committed to providing housing counseling and ﬁnancial education services in accordance with the Fair Housing Act and all applicable civil rights laws.

We do not discriminate based on race, color, religion, national origin, sex, familial status, disability, age, sexual orientation, gender identity, or any other protected status. We are committed to equal opportunity and equitable access for all individuals and families.

Limited English Proﬁciency (LEP) Access

VAREP is committed to ensuring meaningful access to services for clients with limited English proﬁciency. Upon request, we will provide translation materials or access to interpreter services in accordance with HUD guidelines.

For assistance in another language, please contact us at: info@varep.net.

HUD Disclaimer

The content does not necessarily reﬂect the views or policies of HUD or the U.S. Government.

Privacy and Conﬁdentiality Statement

VAREP protects the conﬁdentiality of all personal information shared during housing counseling or ﬁnancial education.

We do not disclose any personally identiﬁable information to third parties without your written consent, except as required by law or for HUD grant compliance and reporting purposes.

Welcome, First-Time Homebuyers

Making the leap from renting to owning can feel overwhelming—but you don’t have to navigate it alone. Whether you're just starting to explore the idea of homeownership or you're ready to begin the process, this guide was built with you in mind.

This guide provides clear, step-by-step information to help you move confidently from tenant to homeowner. You’ll learn how to assess your financial readiness, explore loan options, tap into grants and programs, and understand the entire homebuying journey from start to finish.

How to Use This Guide

Read Cover to Cover for a complete understanding of what it takes to buy your ﬁrst home

Skip to the Sections You Need—whether you're focused on credit, ﬁnancing, property search, or post-purchase planning

Check Out Section 6 to learn about the MVP Heroes Housing Network, a VAREP program o ering personalized support and exclusive savings for government and community heroes

Don’t forget to explore the appendices—packed with checklists, worksheets, and practical tools to guide you every step of the way.

If you need personalized help, reach out to a HUD-approved housing counseling agency like VAREP by visiting hud.gov/counseling.

Let’s begin your journey home—together.

Disclaimer

Compliance and Non-Discrimination Notice

Welcome, First-Time Homebuyers

Section 1: Is Homeownership Right for You?

Section 2: Understanding Your Finances

Section 3: Getting Pre-Approved and Understanding Loans

Section 4: Choosing the Right Home

Section 5: The NAR Settlement – What it Means to You as a Homebuyer

Section 6: Real Estate Savings with the MVP Heroes Housing Network

Section 7: The Homebuying Process

Section 8: Life as a Homeowner

Section 9: Avoiding Pitfalls and Scams

Appendix A: Basic Real Estate Glossary of Terms

Appendix B: Rent vs. Buyer Worksheet

Appendix C: Homebuyer Readiness Checklist

Appendix D: Needs vs. Wants Worksheet Appendix E: Homebuying Process Checklist

Section 1: Is Homeownership Right For You?

Renting vs. Owning: Pros and Cons

Buying a home is a major life decision—ﬁnancially, emotionally, and logistically. This section will help you reﬂect on your goals, evaluate your current lifestyle, and understand what owning a home really means.

Renting vs. Buying: Making the Right Choice

Factor

Upfront Costs

Monthly Expenses

Flexibility

Stability

Maintenance

Equity/Wealth

Customization

Tax Beneﬁts

Signs You're Ready to Buy

Renting

Security deposit, ﬁrst/last month rent

Fixed rent (often excludes utilities)

Easy to relocate at lease end

Rent can increase; lease may not renew

Landlord respinsible

No equity—you're paying for someone else’s asset

Limited or prohibited

None

You plan to stay in the same area for at least 3–5 years

Your income is steady and reliable

You've saved for a down payment and closing costs

Your credit and debt are in good shape

You're emotionally ready for responsibility (repairs, taxes, etc.)

You want to build equity and invest in your future

When It Might Be Better to Keep Renting

You're unsure about your job stability or relocation potential

You don’t have a stable income or emergency savings

You haven’t had time to build or improve your credit

You prefer low responsibility and ﬂexibility

Owning

Down payment, closing costs

Mortgage, taxes, insurance, maintenance

Harder to move; may need to sell or rent out

Long-term housing security with ﬁxed payments (if ﬁxed-rate)

You handle repairs and upkeep

Builds equity and long-term wealth

Full freedom to modify and improve

Possible mortgage interest and property tax deductions

Lifestyle Considerations

Do you work remotely and need home o ce space?

Are you planning a family and need room to grow? Will commuting distance impact your decision?

Would a condo or townhome with HOA beneﬁts better ﬁt your needs?

Special Considerations for Military & Government Employees

Are you likely to receive PCS orders or relocate within 1–3 years?

Does your agency or union o er homeownership beneﬁts or relocation assistance?

Are you eligible for a VA loan or other housing program?

Self-Reﬂection: What’s Your ‘Why’?

1- Why do I want to buy a home?

2- What does owning mean to me: stability, pride, investment, security?

3- What sacriﬁces am I willing to make to own?

4- Do I want to be a homeowner—or do I feel pressure to become one?

Reality Check: Ownership Comes with Responsibility

Owning a home means

Paying for repairs—even the big ones (like a new roof)

Handling yardwork, plumbing, heating, and pest issues

Budgeting for property taxes and insurance increases

Being committed for the long term

Decision Worksheet (Mini-Exercise)

Statement

I can a ord a monthly payment that includes taxes and insurance

I have savings to cover at least 3 months of expenses

I plan to stay in the area for at least 3–5 years

I’m prepared to take care of home maintenance and repairs

I’ve checked my credit and know where I stand

I have a strong reason why I want to buy a home

Score: The more “Yes” responses, the closer you are to readiness.

Section 2: Understanding Your Finances

Understanding Your Finances

Financial readiness is the foundation of successful homeownership. This section dives deeper into how to assess your ﬁnancial health, prepare for the costs of buying a home, and build a realistic, sustainable plan.

What’s in a Credit Report?

Payment history (35%)

Credit utilization (30%)

Length of credit history (15%)

New credit inquiries (10%)

Credit mix (10%)

Tip: Dispute errors on your credit report through AnnualCreditReport.com. Under federal law, you can request one free report per bureau (Equifax, Experian, TransUnion) per year.

How to Improve Your Credit Before Buying

Pay all bills on time—set up automatic payments if needed

Keep credit card balances under 30% of the limit

Avoid opening new credit lines before applying for a mortgage

Don’t close old credit accounts—longevity helps

Your credit score is a summary of the information in your credit report, which includes: Term

Pre-Qualiﬁcation

Pre-Approval

Understanding Pre-Qualiﬁcation vs. Pre-Approval Deep

Front-End DTI

What It Means

Basic estimate of how much you might borrow

Formal lender commitment based on veriﬁed info

Housing costs (mortgage, taxes, insurance, HOA)

Lenders prefer this to be ≤ 28% of gross income

Back-End DTI

Housing + all other debts (loans, cards, alimony, etc.)

Ideally ≤ 36–43%, depending on loan type

Note: VA Loans: Often allow higher DTI if residual income is strong.

How Much House Can You A ord?

The 28/36 RulePOA must speciﬁcally authorize real estate and loan transactions.

Spend no more than 28% of gross income on housing

Spend no more than 36% on all debts combined

Saving for a Down Payment & Closing Costs

Conventional: 3–20%

FHA: 3.5%

VA/USDA: 0% (for eligible borrowers)

Closing Costs

Typically 2–5% of the home price

Covers lender fees, title insurance, appraisal, etc.

Tip: Seek a HUD-approved housing counseling organization like VAREP for assistance with Down payment assistance programs and/or Grants from state housing agencies.

Recurring Monthly Costs to Budget

Expense Type

Pre-Qualiﬁcationva

Property Taxes

Homeowners

Insurance

Private Mortgage Insurance (PMI)*

HOA Dues (if applicable)

Utilities

Maintenance Fund

Estimated Cost (Monthly)

Depends on loan amount and rate

1–2% of home value annually (varies by state)

$50–$100+ per month

0.5–1% annually (if <20% down)

$100–$500/month depending on property

$200–$400+ depending on region/home size

1–3% of home value annually

Tip: *PMI can usually be removed once you reach 20% equity.

One-Time Costs

Earnest money deposit (1–3% of purchase price)

Home inspection ($300–$600)

Appraisal ($400–$700)

Moving expenses

Furniture, appliances, or immediate repairs

Timeline Actions to Take

12–6 Months Out

6–3 Months Out

3–1 Months Out

1 Month Out

Financial Readiness Checklist

Pull credit reports, start saving, reduce debt

Research loan types, attend buyer education courses, estimate costs

Get pre-approved, gather documents, ﬁnalize budget

Start home shopping with agent, prepare for closing costs

I know my credit score and reviewed all 3 credit reports

My DTI is under 43%, and my credit utilization is under 30%

I’ve saved for a down payment (or found assistance options)

I have a separate emergency fund (3–6 months of expenses)

I’ve budgeted for hidden and ongoing homeownership costs

I’m pre-approved for a mortgage, not just pre-qualiﬁed

I’ve researched assistance programs and tax incentives in my area

Section 3: Getting Pre-Approved And Understanding Loans

Getting Pre-Approved and Understanding Loans

Once you're financially ready, your next step is securing financing. Understanding how mortgages work and getting pre-approved helps you shop with confidence—and helps sellers take you seriously.

What Lenders Look For

Factor

Credit Score

Income

Debt-to-Income (DTI)

Assets

Employment History

What It Means

Higher scores = better loan options and lower interest rates

Proof of stable employment and income to repay the loan

DTI under 43% is typically required

Savings, retirement funds, and reserves to cover costs

2+ years of consistent employment (exceptions possible)

The amount you’re contributing toward the purchase Down Payment

Document Checklist

W-2s (2 years)

Recent pay stubs

Tax returns (2 years)

Bank and asset statements

ID and Social Security number

Rental history (for ﬁrst-time buyers)

Buyers with good credit & savings

First-time or lower-credit buyers

Veterans, active-duty, or surviving spouses

Rural and eligible suburban buyers

Flexible terms, avoid PMI with 20% down

Easier credit approval, low down payment

No PMI, no down payment, favorable terms

100% ﬁnancing, low rates

Tip: Shop Around: Compare interest rates, fees, and closing costs from multiple lenders using the Loan Estimate form. CFPB’s loan comparison tool can help.

First-Time Homebuyer Programs & Grants

Many federal, state, and local programs assist ﬁrst-time buyers:

National Assistance Options

FHA Loans – backed by HUD, for buyers with low credit or limited down payments

VA Loans – for military borrowers through the VA Down Payment Assistance Programs – grants, forgivable loans, or matching savings programs

State and Local Housing Agencies

Many states o er programs through Housing Finance Agencies (HFAs) like:

CalHFA (California)

TSAHC (Texas)

SONYMA (New York)

Florida Hometown Heroes

DC Open Doors

How to Find Programs

HUD’s state-by-state program ﬁnder Down Payment Resource

Local nonproﬁts or housing counseling agencies

Understanding Loan Basics Checklist

I understand the di erence between pre-qualiﬁcation and pre-approval

I have my ﬁnancial documents ready

I’ve researched multiple loan options

I’ve shopped with at least 3 lenders or mortgage brokers

I know what ﬁrst-time homebuyer programs I qualify for I’ve received a Loan Estimate and understand my projected costs

Section 4: Choosingthe Right Home

Choosing the Right Home

Finding your dream home is more than scrolling through listings. It’s about making informed decisions based on your needs, budget, and long-term goals. This section helps you deﬁne your priorities, navigate neighborhoods, and work e ectively with your real estate agent.

Deﬁne Your Needs vs. Wants

Before you fall in love with granite countertops or a trendy neighborhood, clarify what truly matters. A clear list keeps you focused and prevents buyer’s remorse.

Must-Haves (Non-Negotiables)

Example: 3 bedrooms

Example: Within 30-min commute

Example: VA loan-eligible home

Evaluate Neighborhoods & Communities

Nice-to-Haves (Flexible)

Example: Walk-in closet

Example: Large backyard

Example: Updated kitchen

The home’s location impacts your daily life and long-term value. Consider:

Commute to work or base

School districts (even if you don’t have kids—a ects resale)

Crime rates and safety

Proximity to healthcare, shopping, parks, etc.

Public transit access

Zoning laws or future developments

HOA rules and fees (if applicable)

Tools to use

NeighborhoodScout.com

Local county property appraiser sites

School rating sites like GreatSchools.org

Choosing the Right Real Estate Agent

A knowledgeable agent can be your advocate and guide—especially as a ﬁrst-time buyer.

What to Look For

Experience with ﬁrst-time or VA buyers

Familiarity with local DPA or grant programs

Good communication and transparency

No pressure to “upsell” you beyond your budget

Registered with the National Association of REALTORS® or equivalent

How many ﬁrst-time buyers have you worked with?

What local programs can I qualify for?

Can you help me understand VA loan requirements (if applicable)?

How do you help in competitive o er situations?

Types of Homes to Consider

Home Type

Single-Family

Townhome

Condo

Multi-Family

New Construction

Fixer-Upper

Home Features to Consider (Checklist)

Section 5: The Nar Settlement – What It Means To You As A Homebuyer

Background:

In 2024, the National Association of REALTORS® (NAR) reached a legal settlement related to the way real estate commissions are structured and disclosed. The lawsuit challenged the long-standing industry practice where sellers typically pay the commission for both their listing agent and the buyer’s agent.

Under the terms of the settlement—expected to take e ect in mid-2025—some key changes will reshape how real estate professionals are compensated and how those costs are presented in home sales.

What Does the NAR Settlement Change?

Here are the major implications of the settlement that may a ect you as a homebuyer:

1. Buyer Agent Compensation Is No Longer Automatically O ered by the Seller

Sellers and listing brokers can no longer advertise compensation for buyer’s agents through the MLS (Multiple Listing Service).

This means buyer agent fees may no longer be baked into the price of the home and paid by the seller.

2. Written Buyer Representation Agreements Are Required

Real estate agents representing buyers will now be required to enter into written agreements with their clients before showing homes.

These agreements will spell out the services the agent provides and how much compensation the buyer is expected to pay, if any.

3. Greater Transparency, but Possibly More Out-of-Pocket Costs

As a buyer, you’ll now see agent fees more clearly—potentially separated from the home’s sales price.

In some cases, buyers may be asked to pay their agent directly, negotiate a reduced fee, or request that the seller cover it as part of the purchase agreement.

How This A ects You as a Homebuyer

Pros:

Greater transparency in how agents are paid

More freedom to negotiate agent fees and services

Buyer-agent relationships become clearly deﬁned upfront

You may now need to budget for your agent’s fee in addition to your down payment and closing costs

Not all sellers may be willing to cover buyer agent compensation Some agents may begin o ering fee-based or à la carte service models

Tips to Navigate the Changes

Ask Early: During your ﬁrst conversation with a real estate agent, ask how they’re compensated and whether you’ll be responsible for any fees.

Get It in Writing: A buyer representation agreement is now required—make sure it clearly outlines services and fees.

Negotiate Smartly: Just as you negotiate the home price, you may be able to negotiate agent compensation or ask the seller to contribute as part of your o er.

Work with Trusted Professionals: Partner with trained and certiﬁed agents—like MVP Real Estate Ambassadors—who are transparent and mission-aligned.

Section 6: Real Estate Savings With The Mvp Heroes Housing Network

What is the MVP Heroes Housing Network?

The MVP Heroes Housing Network (MVPHHN) is a national initiative powered by the Veterans Association of Real Estate Professionals (VAREP). It connects military and veteran heroes with a trusted team of certiﬁed real estate, lending, and business professionals—known as MVP Ambassadors—who are trained to understand and serve your unique needs throughout the homebuying process.

The program is open to

Active-duty servicemembers

Veterans of all eras

Reservists and National Guard

Gold Star and surviving spouses

Law Enforcement

Fireﬁghter

First Responders

Healthcare Professionals

Teacher & Educators

Civil Servants a.k.a. Government Workers

To be eligible for MVP program beneﬁts, you must:

Complete the onboarding process

Connect with your local MVP team

Be represented at closing by an MVP Real Estate Ambassador

For additional savings, work with an MVP Lender and MVP Business Ambassadors

Real Rewards Disclosure

Post-closing payments are not available in Alabama, Alaska, Iowa, Kansas, Mississippi, Missouri, Oklahoma, Oregon, Tennessee, and Louisiana. However, a credit at closing is permitted in all 50 states. Actual savings vary based on the services used, home price, property type, and commission structure.

Section 7: The Homebuying Process

The Homebuying Process

Buying your ﬁrst home can feel overwhelming—but knowing the steps in advance makes the process smoother and less stressful. This section walks you through the full journey from o er to closing day and beyond.

Overview of the Homebuying Journey

Get Pre-Approved

Find a Real Estate Agent

Shop for Homes

Make an O er

Complete Inspection & Appraisal

Final Loan Approval & Underwriting

Review Disclosures & Do a Final Walkthrough

Close on the Home

Move In!

Making an O er & Negotiating

Your agent will help you submit an o er that includes

O er price

Contingencies (ﬁnancing, inspection, appraisal)

Preferred closing date

Earnest money deposit (usually 1–3%)

Negotiation Topics

Price adjustments

Seller-paid closing costs

Repairs or appliance credits

Tip: In competitive markets, include a strong pre-approval letter.

Home Inspection

Hire a professional to inspect the home’s:

Roof, foundation, and structure

Plumbing and electrical systems

Heating/cooling (HVAC)

Appliances and water heater

You’ll receive a report. From there, you can:

Proceed with the sale

Ask the seller to make repairs or o er credit

Cancel the deal (if allowed by your contingency)

Appraisal

Lenders require an appraisal to conﬁrm the home is worth the loan amount.

If value ≥ o er price → continue

If value < o er price → renegotiate or cancel

VA Loans: Appraisals must also meet VA’s Minimum Property Requirements (MPRs).

Final Loan Approval & Underwriting

Your lender reviews all documentation:

Employment/income veriﬁcation Credit report update

Inspection and appraisal reports

If all checks out, you’ll receive a Clear to Close (CTC).

Tip: Don’t open new credit accounts, switch jobs, or make large purchases before closing.

Understanding Key Mortgage Disclosures & Documents

Document

Loan Estimate (LE)

Purpose

Initial breakdown of your loan terms, interest rate, and estimated costs

Closing Disclosure (CD) Finalized loan details; must be given at least 3 days before closing

Promissory Note

Legal agreement to repay your mortgage

Mortgage or Deed of Trust Gives lender the right to foreclose if you don’t pay

Title Documents Shows legal ownership and any property liens

Review the Closing Disclosure carefully. Check for

Accuracy in loan terms

Closing costs you expected

Cash needed to close

Typically done 1–2 days before closing, this ensures:

Home is clean and move-in ready

Agreed-upon repairs were completed

No new damage has occurred

Appliances, plumbing, and lights still work

Seller has removed all belongings

Tip: Don’t sign the closing documents if anything major is wrong—request a repair agreement or delay closing if needed.

Closing Day: What to Expect

Closing is where you sign legal documents and o cially become the homeowner.

Bring:

Government-issued ID

Proof of homeowner’s insurance

Cashier’s check or wired funds for closing costs

You’ll Sign:

Final loan documents

Deed and title forms

Closing Disclosure Escrow paperwork

Then... you’ll get the keys!

Summary Checklist

I understand the step-by-step homebuying timeline

I reviewed and understood my Loan Estimate and Closing Disclosure

I completed the ﬁnal walkthrough and documented any issues

I prepared all items needed for closing day

I explored remote/digital closing options if needed

I created a move-in checklist and utility transfer plan

Section 8: Life As A Homeowner

Life as a Homeowner

Buying a home is just the beginning. The real journey begins after you move in. This section helps you understand how to protect your investment, plan for future expenses, and stay ﬁnancially secure as a new homeowner.

New Expenses to Expect

Expense Notes

Mortgage Payment

Property Taxes

Homeowners Insurance

HOA Dues (if applicable)

Utilities (Water, Gas, etc.)

Maintenance & Repairs

Typical Frequency

Monthly

Annually or Monthly

Monthly or Quarterly

Monthly

As needed (budget annually)

Home Maintenance: Protecting Your Investment

Includes principal, interest, taxes, and insurance (PITI)

Often included in escrow

Required by lenders

Can range from $50–$500+ depending on community

May increase with larger home

Budget 1–3% of home’s value per year for upkeep

Routine maintenance preserves your home’s value and prevents costly repairs.

Monthly/Quarterly Tasks:

Replace HVAC ﬁlters

Test smoke and carbon monoxide detectors

Check faucets and toilets for leaks

Seasonal Tasks

Clean gutters and downspouts

Service HVAC systems

Winterize pipes and seal windows

Trim trees away from roof

Annual Maintenance Budget

Aim to set aside 1–3% of your home’s value annually. For example:

$250,000 home = $2,500–$7,500/year

Equity is your ownership stake in the home. You build it in two ways:

Paying down the mortgage

Appreciation in home value

Ways to Build Equity Faster:

Make extra principal payments (even $50/month helps)

Reﬁnance to a shorter-term loan when ready

Avoid cash-out reﬁnances unless necessary

Understanding Escrow Adjustments

Escrow accounts are used to pay taxes and insurance. These amounts can change yearly.

Annual Escrow Review: Your lender will notify you of changes

Common Reasons for Increases:

Property taxes went up

Insurance premiums increased

Avoiding Financial Trouble

Even responsible homeowners can face unexpected hardship. Here’s how to prepare:

Emergency fund: Keep 3–6 months of housing expenses

Job loss or income drop: Call your lender early—they may o er forbearance or payment plans

Don’t ignore missed payments: One late mortgage payment can hurt your credit and risk foreclosure

Tip: Contact a HUD-certiﬁed housing counselor if you're struggling. Visit hud.gov/housingcounseling

Homeowner To-Do List: First 90 Days

Change locks and security codes

Introduce yourself to neighbors and HOA

Store your deed, insurance, and loan documents securely

Create a home maintenance binder or app tracker

Protecting Your Home & Identity

Set up two-factor authentication on accounts (mortgage, utilities, insurance)

Beware of deed and mortgage scams (you do NOT need to pay for a copy of your deed)

Consider identity theft monitoring—especially if you bought online or used digital signatures

Long-Term Homeownership Tips

Revisit your insurance policy every 1–2 years to check for savings or gaps

Keep receipts for major home improvements (can reduce capital gains tax later)

Start a savings account for future renovations or emergencies

Consider energy-e cient upgrades (eligible for federal tax credits)

Section Summary

I’ve updated my monthly budget to include new homeowner costs

I’ve scheduled regular maintenance tasks

I understand my mortgage and escrow setup

I have an emergency fund and know what to do if I miss a payment

I’m tracking my home equity and keeping records of improvements

I’ve taken steps to protect my home, identity, and credit

Section 9: Avoiding Pitfalls And Scams

Avoiding Pitfalls and Scams

Purchasing a home is a significant milestone, but it's also a process where vigilance is crucial. Being aware of potential pitfalls and scams can protect you from financial loss and emotional distress. This section outlines common red flags, predatory practices, and steps to safeguard your personal and financial information.

Red Flags in Real Estate and Lending

Unrealistic O ers: Listings with prices signiﬁcantly below market value may be bait for scams.

Pressure to Act Quickly: Fraudsters may urge immediate decisions to prevent you from conducting due diligence.

Requests for Upfront Payments: Be wary of demands for wire transfers or cash payments before any formal agreement.

Lack of Proper Documentation: Missing or inconsistent paperwork can indicate fraudulent activity.

Unveriﬁed Identities: Ensure all parties involved are legitimate and have veriﬁable credentials.

How to Spot Predatory Practices

Predatory lending involves unfair, deceptive, or fraudulent loan practices. Recognize these tactics:

Excessive Fees and Interest Rates: Charges that far exceed standard rates without clear justiﬁcation.

Loan Flipping: Repeated reﬁnancing that beneﬁts the lender but increases your debt.

Balloon Payments: Large, lump-sum payments at the end of a loan term that were not clearly disclosed.

Prepayment Penalties: Fees for paying o a loan early, limiting your ﬁnancial ﬂexibility.

Misrepresentation of Loan Terms: Verbal promises that di er from the written agreement.

Protecting Personal and Financial Information

Secure Communication: Use encrypted channels when sharing sensitive information.

Verify Contacts: Conﬁrm the identities of real estate agents, lenders, and other parties through o cial channels.

Monitor Financial Accounts: Regularly check your bank and credit accounts for unauthorized activity.

Limit Sharing of Personal Information: Only provide necessary details, and avoid oversharing on public platforms.

Use Strong Passwords: Implement complex passwords and change them regularly.

Reporting Housing Discrimination or Fraud

If you encounter or suspect fraudulent activities or discrimination, take immediate action:

Housing Discrimination: Report to the U.S. Department of Housing and Urban Development (HUD) at www.hud.gov/fairhousing or call 1-800-669-9777.

Mortgage Fraud: Contact the Federal Trade Commission (FTC) at www.ftc.gov or call 1-877-FTC-HELP.

Identity Theft: Report to the Federal Trade Commission at www.identitytheft.gov.

Local Authorities: File a report with your local police department and notify your state's attorney general's o ce.

By staying informed and cautious, you can navigate the homebuying process safely and conﬁdently. Always consult with trusted professionals and report any suspicious activities to the appropriate authorities.

Appendix A: Basic Real Estate Glossary Of Terms

Amortization: The gradual repayment of a mortgage loan through regular payments over time.

Appraisal: An expert assessment of a property's market value, often required by lenders.

Assessed Value: The valuation placed on a property by a public tax assessor for purposes of taxation.

Assumption: The transfer of an existing mortgage from the current owner to a buyer.

Balloon Mortgage: A mortgage with low initial payments that require a large lump-sum payment at the end of the term.

Broker: A licensed individual who arranges real estate transactions between buyers and sellers.

Closing: The ﬁnal step in a real estate transaction where the title is transferred to the buyer.

Closing Costs: Fees and expenses, over and above the price of the property, incurred by buyers and sellers during the transfer of ownership.

Contingency: A condition that must be met for a real estate contract to become binding.

Deed: A legal document that conveys ownership of property from one party to another.

Down Payment: An initial payment made when purchasing a property, typically a percentage of the total price.

Earnest Money: A deposit made to a seller showing the buyer's good faith in a transaction.

Escrow: A ﬁnancial arrangement where a third party holds and regulates payment of funds required for two parties involved in a given transaction.

Fixed-Rate Mortgage: A mortgage with an interest rate that remains the same for the life of the loan.

Foreclosure: The legal process by which a lender takes control of a property due to the owner's failure to make mortgage payments.

Good Faith Estimate (GFE): An estimate of the fees and costs associated with a mortgage loan, provided by the lender.

Home Inspection: An examination of the condition of a real estate property, usually performed in connection with its sale.

Homeowners Association (HOA): An organization in a subdivision, planned community, or condominium that makes and enforces rules for the properties within its jurisdiction.

Interest Rate: The proportion of a loan charged as interest to the borrower, typically expressed as an annual percentage. Jumbo Loan: A mortgage loan that exceeds the conforming loan limits set by the Federal Housing Finance Agency.

Lien: A legal right or interest that a lender has in the borrower's property, lasting until the debt obligation is satisﬁed.

Loan-to-Value Ratio (LTV): A ﬁnancial term used by lenders to express the ratio of a loan to the value of an asset purchased.

Mortgage: A legal agreement by which a bank or creditor lends money at interest in exchange for taking title of the debtor's property.

Mortgage Insurance (MI): Insurance that protects the lender in case the borrower defaults on the loan.

Note: A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a speciﬁed period.

Origination Fee: A fee charged by a lender for processing a new loan application.

Pre-Approval: A preliminary evaluation by a lender that determines whether a potential borrower qualiﬁes for a loan.

Private Mortgage Insurance (PMI): Insurance that protects the lender if the borrower defaults on the loan, typically required when the down payment is less than 20%.

Quitclaim Deed: A legal instrument that is used to transfer interest in real property.

Reﬁnancing: The process of replacing an existing mortgage with a new loan, typically with better terms.

Short Sale: A sale of real estate in which the net proceeds fall short of the debts secured by liens against the property.

Survey: A process conducted to determine property lines and locate features of the property.

Title: A legal term for a bundle of rights in a piece of property in which a party may own either a legal interest or equitable interest.

Title Insurance: A form of indemnity insurance that protects the holder from ﬁnancial loss sustained from defects in a title to a property.

Underwriting: The process by which a lender decides whether a potential creditor is creditworthy and should receive a loan.

VA Loan: A mortgage loan in the United States guaranteed by the U.S. Department of Veterans A airs.

Walk-Through: A ﬁnal inspection of a property by the buyer before closing.

Appendix B: Rent Vs. Buy Worksheet

Financial Considerations

Question

Do I have enough savings for upfront costs?

Can I a ord ongoing monthly costs?

Is my credit score su cient?

Will BAH cover my housing costs?

Are my income and employment stable?

Have I reviewed my VA loan eligibility?

Market Time & Conditions

Question

Are rent prices rising in my area?

Are home prices & interest rates high or low?

First month + deposit

Rent + renters insurance

Usually more ﬂexible

Often yes

Ideal for variable income

Not applicable

VA loans may require $0 down, but closing costs still apply

Mortgage, taxes, insurance, maintenance

620+ for most VA lenders

Usually, but check local market

Steady income preferred

May o er $0 down, no PMI

May make renting better short-term

Easier to exit lease

Is the local housing market volatile? A ects a ordability

Time & Stability

Question

Do I want to avoid maintenance & repairs?

Do I want to customize or renovate my space?

IDo I have or plan to have pets?

Do I value ﬂexibility over long-term investment?

Landlord handles it

Might favor buying instead

Favorable buying when low

Buying may carry market risk

Homeowner is responsible Full control over upgrades

May require approval or fees

Yes

May prefer buying later

Question

Do I want to avoid maintenance & repairs?

Do I want to customize or renovate my space?

Do I have or plan to have pets?

Landlord handles it

Homeowner is responsible

Full control over upgrades

May require approval or fees More freedom

Do I value ﬂexibility over long-term investment? Yes

Legal & Regulatory Issues

Question

Have I reviewed the lease for restrictions and penalties?

Do I understand HOA rules or zoning if buying? Not applicable

Equity & Investment Potential Question

Do I want to build equity in a property?

Do I want to beneﬁt from rising home values? No

Do I want ﬁxed monthly payments?

Tax & Financial Implications

Question

Do I want access to housing tax deductions (e.g., mortgage interest)?

If renting out a home later, am I prepared to manage rental income taxes?

Decision Tip

equity gained

Rent may rise annually

May prefer buying later

applicable

May a ect what you can do

Mortgage builds ownership over time

Potential long-term appreciation

Fixed-rate mortgages o er stability

Not applicable

Renting may be better if you need ﬂexibility, plan to move soon, or aren’t ﬁnancially ready to commit.

Yes—may reduce tax burden

Must report rental income, expenses

Buying may be better if you plan to stay 5+ years, and want to build long-term wealth.

Appendix C: Homebuyer Readiness Checklist

Financial Readiness

Rent vs. Buy Analysis Completed

Compared monthly costs, stability, and goals over time.

Credit Report Reviewed and Corrected

Reviewed report from AnnualCreditReport.com.

Disputed errors and addressed any outstanding collections.

Credit Score Meets Loan Requirements

Aim for 620+ for VA loans (varies by lender).

Lower scores may need more documentation or rehabilitation. My credit score is______________

Debt-to-Income Ratio (DTI) Evaluated

Ideal DTI for VA loans: 41% or less, but compensating factors may apply. My DTI is_____________

Budget and Emergency Fund in Place

Minimum 1–3 months of expenses saved (6+ months preferred).

Account for utilities, furnishings, maintenance, and move-in costs.

Stable and Documented Income

W-2s, LES (for active duty), or self-employment documentation for 2+ years.

Loan Readiness

Pre-Approval Secured from VA-Experienced Lender

Conﬁrms loan eligibility, amount, and strengthens o er.

Certiﬁcate of Eligibility (COE) Obtained (VA Buyers Only)

Veriﬁes entitlement to use VA loan beneﬁt.

Understand Down Payment, Funding Fee, and Closing Costs

Even with $0 down, plan for other out-of-pocket costs.

Reviewed VA Loan Beneﬁt Features

No PMI, competitive rates, foreclosure protections, reusable beneﬁt.

Attended Financial Education or Counseling Session

Recommended: a HUD-approved housing counselor (like VAREP). Covers budgeting, VA loan education, and personalized guidance.

Understands Local Market Conditions

Researched prices, interest rates, and property types in desired area.

Identiﬁed Personal Priorities & Deal Breakers

Must-haves vs. nice-to-haves for home size, location, schools, etc.

Discussed Timing and Logistics (PCS, ETS, Family Needs)

Especially important for active duty or transitioning servicemembers.

Legal Readiness (POA, Title, Trusts if Applicable)

Consider Power of Attorney if deployed or unavailable during closing.

Seek Housing Counseling Support

Connect with a HUD-Approved Housing Counseling Agency like VAREP.

VAREP can help with

Budgeting

Credit readiness

Gather documents

Finding and applying for closing-costs grants

Hero savvy real estate and lending professionals

Visit www.varep.net

Appendix D: Needs Vs. Wants Worksheet

Instructions

Review each category and feature listed below.

Determine whether each feature is a "Must-Have" or a "Nice-to-Have" based on your personal needs and preferences. Use the "Notes" section to add any speciﬁc comments or considerations.

Home Features Category Need

Single-level layout

Open ﬂoor plan

Number of Bedrooms (specify)

Number of Bathrooms (specify)

Home o ce space

Energy-e cient appliances

Central heating & cooling

Fireplace

Hardwood ﬂooring

Updated kitchen

Walk-in closets

Garage (specify size)

Basement or attic

Laundry room

Smart home technology

Solar panels

Fenced yard

Garden or outdoor space

Swimming pool

Home security system

Location

Personal & Family Needs

Category Need Want Notes

Pet-friendly accommodations

Accessibility features

Space for extended family

Proximity to support networks

Childcare facilities nearby

Opportunities for community engagement

Cultural or religious community nearby

Future Considerations

Fenced yard, nearby parks

Ramps, wide doorways

Multi-generational living

Family and friends

For families with young children

Clubs, organizations

Community support

Category Need Want Notes

Potential for home expansion

Resale value

Rental income potential

Zoning regulations

Environmental risks (ﬂood zones, etc.)

Safety Consideration Need Want Notes

Low crime rate (based on local crime data)

Sex o ender registry check (Megan’s Law)

Well-lit streets and sidewalks

Active neighborhood watch or patrol

Presence of security cameras or surveillance

Gated community or controlled access

Close proximity to police/ﬁre station

Low tra c speeds/ safety signage

Environmental risk zone (ﬂood/ﬁre/hazard)

Good visibility from surrounding homes

Appendix E: Homebuying Process Checklist

Prepare to Buy

Review your credit report and score (aim for 620+ for VA loans)

Create a budget and determine how much home you can a ord

Build or verify your emergency savings (at least 1–3 months of expenses)

Gather important documents: pay stubs, W-2s, tax returns, bank statements

Learn about the VA loan beneﬁt or other programs you qualify for

Attend a homebuyer education session (recommended)

Get Pre-Approved

Choose a VA-experienced lender (or another qualiﬁed lender)

Apply for mortgage pre-approval and receive a pre-approval letter

Obtain your Certiﬁcate of Eligibility (COE) for VA loans

Understand your potential loan amount, estimated monthly payment, and closing costs

Find Your Home

Hire a VA-savvy real estate agent

Create a list of must-haves vs. nice-to-haves

Tour homes in your target area and compare prices, schools, amenities

Research neighborhoods for safety, commute, and future growth

Make an O er

Review the market with your agent to make a competitive o er

Submit your o er with contingencies (inspection, ﬁnancing, appraisal)

Negotiate terms with the seller, if needed

Sign the purchase agreement

Due Diligence Period

Schedule a home inspection and review the report

Negotiate any repairs or seller credits based on the ﬁndings

Lender orders the appraisal (VA appraiser if using VA loan)

Ensure the home meets VA’s Minimum Property Requirements (if applicable)

Finalize Your Loan

Provide any remaining documents to your lender

Lock in your interest rate

Receive ﬁnal loan estimate and compare closing disclosures

Schedule your closing date

Closing & Move-In

Conduct a ﬁnal walk-through of the property

Attend the closing meeting and sign all legal documents

Pay closing costs (if any) and down payment (if required)

Receive the keys and deed—you’re now a homeowner!

After Closing

Set up utilities and home services

Change your address with USPS and update records

Save your closing documents in a secure location

Prepare for property taxes and ongoing maintenance

Appendix F: Post-Purchase Checklist

Secure Your Home

Change the locks and garage codes

Test and/or replace smoke and carbon monoxide detectors

Set up or transfer your home security system (if applicable)

Create or update your home emergency kit

Identify utility shuto valves and circuit breakers

Organize, Scan, and Save Important Documents

Closing disclosure and mortgage agreement

Deed and title documents

Home warranty and appliance manuals

Property survey, inspection, and appraisal reports

Update Services and Addresses

Electricity, gas, water, trash, internet

USPS, banks, credit cards, insurance, VA, DFAS, DMV, employer

Schedule Preventive Maintenance

Create a maintenance calendar (monthly, seasonal, annual)

Schedule HVAC inspection and duct cleaning

Service water heater, gutters, plumbing, and roof if needed

Review pest control and landscaping services

Build a Homeowner Tool Kit

Buy or organize basic tools (hammer, screwdriver set, pliers, drill, ladder, etc.)

Assemble emergency repair supplies (ﬂashlight, batteries, ﬁre extinguisher)

Review and Adjust Insurance

Review your homeowner’s insurance policy annually

Add coverage if needed (ﬂood, earthquake, umbrella, etc.)

Update your Servicemembers’ Group Life Insurance (SGLI) and beneﬁciary info if applicable

Prepare for Taxes and Escrow

Understand your property tax due dates (check with county assessor)

Review your escrow account annually if you have one

Track mortgage interest and taxes for tax ﬁling

Claim your homestead exemption if eligible

Create a Long-Term Plan

Create a monthly housing budget (mortgage, utilities, maintenance)

Set up a home repair/emergency savings fund

Track your home equity and market value yearly

Consider future upgrades or VA renovation loan options

Stay Connected & Informed

Join your local neighborhood group or HOA

Stay updated on homeowner rights, VA loan updates, and property beneﬁts

Know your options if ﬁnancial hardship arises (loan modiﬁcation, VA assistance, HUD counseling)

Appendix G: Obtaining Your Annual Free Credit Report

Under the Fair Credit Reporting Act (FCRA), all U.S. consumers are entitled to one free credit report every 12 months from each of the three major credit bureaus: Equifax, Experian, and TransUnion.

How to Request Your Free Reports

1. Online: Visit www.AnnualCreditReport.com

2. Phone: Call 1-877-322-8228

3. Mail: Send the completed form to:

Annual Credit Report Request Service

P.O. Box 105281

Atlanta, GA 30348-5281

You can request all three reports at once or stagger them throughout the year to monitor changes.

Contact the Credit Bureaus

Equifax

Phone: 1-888-378-4329

General Inquiries: P.O. Box 740241, Atlanta, GA 30374-0241

Disputes: P.O. Box 740256, Atlanta, GA 30374-0256

Website: www.equifax.com/personal/contact-us

Website: www.experian.com/contact/personal-services-contacts.html Experian

Phone: 1-888-397-3742

All Inquiries: P.O. Box 4500, Allen, TX 75013

Website: www.transunion.com/customer-support/contact-us-consumers TransUnion

Phone: 1-800-916-8800

All Inquiries: P.O. Box 2000, Chester, PA 19016-2000

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