No, my study isn’t comprehensive. These are just notes from head that highlight my experience selling homes in Nashville since 2003. I work with first time home buyers A LOT. Every buyer and experience is unique but here are some trends I run into over and over again.
- First time buyers generally use the FHA loan. FHA is a government backed loan that offers low interest rates and low down-payments.
FHA requires a 3.5% down-payment that must come from savings or can be a gift from a family member. - Depending on monthly car, school, and debt payments, first time buyers usually spend about 3x their annual gross income on a home. If you bring in $50,000 before taxes, you’ll likely spend about $150,000 on a home. This ratio skews upward if you are interested in urban condo living.
- First time buyers almost always need help paying the closing costs on their loan. This can run 3% or more of the housing cost. With FHA it is acceptable for the seller to pay these costs on your behalf, but obviously it affects the amount you are able to negotiate on final sales price.
- As a first time buyer, you need to make sure you’re taking ALL the monthly home costs into consideration. You must budget for: principal loan payment, property taxes, homeowners insurance, HOA payments, utilities and general maintenance. Online mortgage calculators can be deceiving because they don’t include all these figures. Getting a pre-approval from a local lender can help you determine a monthly payment that is comfortable for you.
Some of my favorite first time buyer neighborhoods:
- East Nashville & Inglewood – trendy, offering access at all price points
- Woodbine – very affordable, convenient to town
- Donelson – great fixers, good quality construction
- Old Hickory Village – for small-town charm in the city
- West Towne / Charlotte Park – up and coming areas on the west side
- Lenox Village – Williamson Co without the price
- Whispering Hills – midway from Cool Springs and Downtown
Steph’s condo picks:
- The Park at Melrose – perfect for Vandy & Belmont students
- The Row at Berry Hill – tons of space for the money, but they don’t hit the market often
- Whitland Crossing – it isn’t as far away as you think. The space and level of finishes is worth it
- Werthan Mills – hip, trendy, and oh so cool
- Gale Park – a little more expensive, but a fab location
- Parklane – walkable Sylvan park local and FHA approved!
Today’s Nashville listings under $200,000
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Great points, thanks for sharing. I run into similar trends with first time buyers in the Charleston SC real estate market. There are some great opportunities out there today, interest rates and prices are low and inventory is high. There would be a lot fewer transactions taking place without the FHA loan program. Getting pre-approved for your loan is a key first step in the home buying process, this will save a great deal of time and frustration. Once you have a firm handle on your loans options an effective search can begin. Buying a home is generally one of the largest financial decisions a person will ever make. Put a “buyer’s agent” to work and have the benefit of an experienced professional on your side. Your buyer’s agent is your advocate, your advisor, your negotiator, and your confidante throughout the buying process.