On the surface, buying a home seems easy: Just get a loan and buy it, right? But once you dig into the details, it starts to look more like rocket science than a simple transaction.
That's where first-time homebuyer classes come in. These classes aren't generally required to buy a home, but if you want access to special funding or programs, you might need to complete one. But even if not required, they better prepare you for the homebuying process (even if it's not your first time). Knowing what to expect can help you get the best possible outcome when buying a home and help you avoid problems with homeownership down the road. Here's what you need to know.
- First-time homebuyer classes are available to first-time and prior homebuyers, covering multiple facets of the home purchase process in depth.
- You may be required to complete one to qualify for certain types of loans or special funding programs.
- Courses may be taken online, in person, or by phone.
- Courses generally cost between $50 and $100 and take up to eight hours to complete.
What Is a First-Time Homebuyer Class?
A first-time homebuyer class is a comprehensive course that teaches you everything (or nearly everything) you need to know about the homebuying process. It's geared towards people buying their first home, but you can take one even if you've bought a home before and want to brush up on your skills.
First-time homebuyer classes are offered by a range of different organizations like nonprofits, state housing finance agencies (HFAs), and even banks and credit unions. They may be offered in-person, online, or over the phone. In-person courses allow for more interaction and questions, but online ones can be done at your own pace.
First-time homebuyer classes fall into two categories: those that are approved by the Department of Housing and Urban Development (HUD) and those that aren't. Both will help you learn about the homebuying process, but the HUD-approved courses are generally the ones you'll need to take to get access to special funding programs.
If you're looking for assistance from a certain program, make sure to check with the program first to see which first-time homebuyer course it requires. Not all agencies require HUD-approved courses.
What You’ll Learn in a First-Time Homebuyer Course
First-time homebuyer courses tend to be comprehensive. Most are based on a set of industry standards and are likely to cover everything, or almost everything, that you as a prospective homeowner need to know about buying a home. What you'll learn in most courses is split broadly into five core areas:
- How to know whether you're ready to buy a home: This topic area covers whether you're able to afford a home, the pros and cons of homeownership, and the homebuying process. You’ll also consider your credit, your debt-to-income ratio, and how much money you have for a down payment.
- How to budget and get your credit ready: You'll learn how to set goals, set a household budget, track expenses, manage your debt, and how to set a budget for homeownership. You’ll also determine whether your credit is good enough to qualify for a loan—and, if it isn’t, how to fix it.
- How to finance your home: This section covers how mortgage lenders work, how to qualify for a loan, and how to find special financing programs. You’ll learn, too, about different types of loans; the loan application, approval, and closing processes; and how to avoid predatory loans and lenders.
- How to shop for a home: You’ll learn how to choose a home, a neighborhood, and a good realtor. You’ll also learn about different types of homes and homeownership, what the purchase contract is, and the steps to purchase a home. These steps include negotiating and making an offer, escrow, inspections, and the home closing process.
- How to maintain your home and finances: This topic area covers how to maintain your investment by having proper insurance coverage, planning ahead for repairs and maintenance, and using energy-efficient practices and appliances. You’ll also pick up tips on preventative maintenance, making needed repairs and improvements, how homeownership affects your taxes, and what to do if you can’t make a mortgage payment.
Is a First-Time Homebuyer Class Required?
It depends. A first-time homebuyer class is not required to buy a home in general. However, if you'll be taking advantage of certain first-time homebuyer assistance programs or special financing options, you may need to complete a first-time homebuyer education course as a condition of receiving the help.
For example, state HFAs commonly offer down payment assistance or affordable loans that require a HUD-approved first-time homebuyer course. Fannie Mae also requires you to complete a class if you're a first-time homebuyer under certain circumstances. These include if you are buying a home with a HomeReady mortgage or HFA Preferred mortgage—or if you’re buying with less than a 5% down payment.
Even when a first-time homebuyer course is not required, it's still a good idea to take one. You'll learn what to expect from the homebuying process, which could save you some money. You can even take a first-time homebuyer course if you've bought a home before.
Homebuyer Education Course Cost and Time Commitment
The amount of time it takes to complete a first-time homebuyer course varies depending on who's teaching it and what exactly the course covers. But in general, you can expect to spend between four and eight hours to complete one. Naturally, the more time you spend, the more comprehensive you should expect the class to be.
Your lender will require a certificate of completion in order to approve your loan. For this reason, it’s best to get the course out of the way as soon as possible. Ideally, you’ll complete it before you even start looking for homes. A lot of the information you'll learn will come in handy during the home shopping process.
Some first-time homebuyer classes are free. But you can expect to pay between $50 and $100 for a HUD-approved course.
Finding a First-Time Homebuyer Class
If you're looking for an in-person course, you can find a list of HUD-approved agencies that offer first-time homebuyer education courses in its directory. If you'd rather complete a class online, many websites offer remote first-time homebuyer classes. Framework and HomeTrek are two popular choices.