Buying a home can be both exciting and daunting — even more so if you’re looking to buy in a large, bustling market like Atlanta. In addition to being a favorable market for first-time homebuyers thanks to its low cost of living relative to other major U.S. cities, Atlanta’s real estate boasts long-term investment value. These qualities are especially attractive to millennial homebuyers and emerging affluent homebuyers.
Not only does buying a house require a huge personal and financial commitment, but finding the right neighborhood amid hundreds of possibilities can be intimidating. Not to mention the fact that the stresses of qualifying, providing documentation and trying to get to the closing table unscathed can be downright overwhelming.
However, with a bit of research, planning and homework done in advance, you can navigate these troubled waters more easily than you think — which is why we have prepared this first-time homebuyer’s guide to help you prepare to buy your first home in Atlanta. Taking the following steps will help alleviate the stress so your first home buying experience can be less on the “daunting” side and more on the “exciting” side.
Table of Contents
- Getting your finances in order
- Qualifying for mortgage pre-approval
- Financing Options for First-Time Buyers
- Getting to know the Atlanta real estate market
- Hiring a real estate agent
- House hunting in Atlanta
- FAQs
Getting Your Finances in Order
First things first — are you financially ready to buy a home? To answer this question, you need to put together a financial strategy. If you have not already done so, make a detailed budget to help
you determine how much of a down payment you can make on a home, as well as how much you can reasonably afford in monthly payments.
An online mortgage calculator can be a helpful tool to help you play with the numbers so you can estimate how much home you can realistically afford to buy.
After your preliminary budgeting, take the following steps to prepare further:
- Check your credit score. Use CreditKarma to check your score at any time. Look for bad marks or errors that might weigh down your credit score, and report mistakes to have them corrected. If necessary, take time to pay down some debt before applying for a loan.
- Assemble your proof of income. Most lenders will want at least two to three years of tax returns plus pay stubs from your employer for the past few months to demonstrate consistent income.
Qualifying for Mortgage Pre-Approval
Before beginning your house hunt, you need to understand how mortgage approval works. It’s also a good idea to go to a lender or mortgage broker to get pre-approved for a loan. Pre-approval serves two purposes:
- Pre-approval gives you a realistic price range to help you narrow your search.
- A pre-approval letter tells sellers that you’re a serious buyer with the financial ability to pay if you agree on an amount.
Be sure not to confuse pre-approval with pre-qualifying, which carries less weight and is primarily for your information. Getting pre-approved gives you more clout once you start house hunting in earnest, and it also gives you a better chance of final approval since the lender has already given you preliminary approval for a mortgage of a certain size.
Financing Options for First-Time Buyers
If you are buying a home for the first time – or for the first time in a while – you may have more financing alternatives than simply trying to qualify for a conventional mortgage loan. There are several federal and state-backed programs that are designed to make homeownership more accessible for first-time buyers. When talking to your lender about pre-approval, be sure to ask about the following financing options.
FHA Loans
An FHA loan is a government-backed loan that enables first-time homebuyers to purchase a home with a reduced down payment – typically around 3.5 percent of the purchase price versus 20 percent down for a conventional loan. FHA loans also have more lenient qualification requirements than conventional mortgages to make it easier to qualify for them. To be eligible for an FHA loan, you need a credit score of at least 580 (or even as low as 500 in some cases), and the home needs to be your primary place of residence. You may even qualify for an FHA loan if this isn’t your first time buying a home, so be sure to ask your lender if you meet the requirements.
VA Loans
If you have served in any of the armed forces, you may be eligible for a VA loan – a special loan guaranteed by the Department of Veterans Affairs that enables current and former military personnel (or their surviving spouses) to buy a home with no down payment and with lenient eligibility requirements. You may qualify for a VA loan if:
- You were in active service for at least 90 consecutive days during wartime (or 181 consecutive days during peacetime)
- You served in the National Guard or Reserves for at least six years
- You are the surviving spouse of a service member who died in the line of duty
USDA Loans
USDA loans are zero-downpayment loans specifically designed for people buying homes in rural areas who might not otherwise qualify for a traditional mortgage due to income or low credit scores. To qualify for a USDA loan, you must be planning to purchase an eligible home in a rural area (or certain qualifying suburb), have a consistent income, meet minimum credit standards and have a monthly payment no higher than 29 percent of your monthly income.
Georgia Dream
Eligible first-time homebuyers in Georgia may also qualify for a special state-run program called the Georgia Dream Homeownership Program. This program works in tandem with participating lenders issuing FHA, VA, USDA, and conventional loans by offering a separate downpayment assistance loan at zero percent interest. The downpayment loan does not need to be repaid until you sell the home. To be eligible for this program, you must:
- Be a first-time homebuyer (or not have owned a home within the past 3 years);
- Purchase a home in a designated “targeted area” that falls within purchase price requirements;
- Have a minimum middle credit score of 640
- Have an income below the qualifying maximum threshold.
Invest Atlanta, the First-Time Homebuyer Program for Atlantans
Another key resource for first-time Atlanta homebuyers to consider is Invest Atlanta, the city’s official first-time homebuyer program. This program combines an educational process with financing options and various downpayment assistance incentives, laying out a fairly straightforward path to homeownership for first-time buyers.
To qualify for the program, applicants must first attend an initial mandatory Q&A session, then enroll in an approved homebuyer education class. They can then apply for financing through one of the program’s preferred lenders, after which they may qualify for one or more incentives designed to reduce their out-of-pocket costs for homeownership. Invest Atlanta isn’t for everyone, but if you are buying for the first time, have limited assets or overwhelmed by the process, this program can help you find your path to owning your first home.
To learn more about these special financing options and other programs that can help you, see our article on Downpayment Assistance for First-Time Atlanta Homebuyers.
Getting to Know the Atlanta Real Estate Market
Over the past few decades, Atlanta has emerged to become one of the most thriving metropolitan areas in the Southeast – with a bustling real estate market to match. While home values remain
relatively affordable compared to other large U.S. cities, the average sales price in Atlanta was up nearly 18 percent in early 2021 over the previous year, with home values expected to continue rising at very healthy rates over the next few years.
Atlanta offers a rich tapestry of different neighborhoods that boast their own unique vibes. While the Buckhead area and the northern suburbs continue to be highly coveted among homebuyers, it’s still possible to find relatively affordable homes in these affluent Atlanta neighborhoods. Meanwhile, several Intown neighborhoods like Cabbagetown, West End, Adair and Old Fourth Ward are in the midst of a major revitalization, especially for younger buyers who are taking a fresh interest in the new urban lifestyle. These are great neighborhoods to find an excellent starter home.
If you’re looking for the best value for the money in a new home, you might also check out some of the many neighborhoods along the Atlanta BeltLine (Atlanta’s new multi-use trail network). Homes in these areas are expected to increase in value quickly as the BeltLine continues to develop. Examples of promising neighborhoods along the BeltLine include West End, Reynoldstown, Ormewood Park, Grant Park and others.
For a more in-depth overview, we’ve put together an Atlanta Neighborhood Guide for New Homebuyers to guide you through some of the hottest neighborhoods for first-time buyers.
Hiring a Knowledgeable Real Estate Agent
With financial planning, pre-approval and neighborhood research now complete, you are in a better position to move forward with your home search. Now it is time to find an excellent Atlanta real estate agent to help you find your dream home.
You can obviously search on your own, but in Atlanta’s vast and competitive market, it is best to have someone in your corner who can offer you options, negotiate with sellers and seller’s agents and look out for your interests. Here are five questions to ask when choosing an agent that will help ensure you have a positive experience.
House Hunting in Atlanta
Once you’ve narrowed down some neighborhoods, it’s time to start hunting!
Start by putting together a list of your need and wants. Ask yourself the following questions:
- How many bedrooms and bathrooms do you need?
- Do you want a single-family home, a townhome or an apartment condo?
- If you have children or plan to start a family, is the school system important to you?
- Do you prefer the quiet of the suburbs, or are you into the walkable urban lifestyle?
- Do you need to be close to work?
- Do you want to be near public transportation?
- Do you want to have access to a nearby park?
- Do you prefer a gated community?
You also have to consider the pros and cons of buying a new or old home — are you willing to buy a “fixer-upper” to get more home for less money? As you tour homes, be sure to have a home viewing checklist in hand and keep an eye out for real estate red flags.
Finally, you need to be ready to make an offer, which is why you should always have an experienced agent in your corner to guide you through the process. This is critical as Atlanta’s real estate market continues to heat up. Here are a few tips for staying on top of Atlanta’s hot real estate market.
FAQs
What credit score do you need to buy a house in Georgia?
As a rule of thumb, the higher your credit score, the easier it is to qualify for a mortgage and take advantage of the lowest interest rates. A credit score of 620 or higher will currently qualify most buyers for a conventional mortgage loan; however, there are also many government-backed loans (e.g., FHA loans) that enable people with lower credit scores to get into a home with a minimal downpayment.
Does Georgia have a first-time homebuyer program?
Yes, the Georgia Dream program is designed to give eligible Georgia buyers a path to affordable homeownership.
What credit score is needed for the Georgia Dream?
Eligible homebuyers must have a minimum credit score of 640 to qualify for the Georgia Dream.
How can I raise my credit score by 100 points in 30 days?
Despite many schemes out there promising huge credit score boosts, there is no “trick” to raising one’s credit score quickly. However, the fastest way to raise your credit score is always to pay down your debt, especially your credit cards. Consumers with no late payments or delinquencies have sometimes seen their credit scores jump by as much as 100 points in a month simply by paying off their revolving debt.
Can I buy a house with a 535 credit score?
Certain FHA loans may allow you to purchase a home with a credit score as low as 535 (or even lower). These loans usually require a minimum downpayment of 10 percent.
What is the fastest way to build credit?
The fastest way to build a good credit history is to pay your bills on time and keep your credit card balances low. If you have no credit as of yet, getting a secured credit card is a good place to start, as is becoming an authorized user on someone else’s credit card.
What is the payment for a $250,000 house?
It depends largely on your mortgage interest rate, the term of your loan (e.g., 15 or 30 years), and how much money you put down. For a 30-year loan financed at 3.9 percent, the payment on a $250,000 home would be approximately $1180.
Ready to buy your first home in Atlanta?
At Atlanta Fine Homes Sotheby’s International Realty, our highly qualified agents are committed to serving your needs as a first-time home buyer in Atlanta, offering personalized insight and advice to help you find the right home in the right neighborhood at the right price. For more information, call us today at 404.237.5000.