It’s graduation season, and if you’ve recently tossed your cap in the air—congratulations! You’ve achieved something major, and now you’re stepping into a new chapter filled with opportunity, responsibility, and big decisions.

For many recent grads, homeownership feels like a distant goal, but the truth is: you might be closer than you think. With the right steps and knowledge, you can set yourself up to buy your first home sooner than most people realize.

Here’s a detailed guide to how recent college grads can qualify for a mortgage—and what you can do right now to get on the path to owning your first home.

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Fact or Myth? “You Need 2 Years of Job History to Get a Mortgage”

Let’s start with a common myth: that you need two full years of employment history to qualify for a home loan. In most cases, yes! — but if you just graduated from college or trade school, your transcript can often be used in place of two years of work history (as long as your new job is in the same field as your studies).

Example:
If you earned a degree in nursing and recently started your first job as an RN, you can qualify for a mortgage using your job offer and your school transcript as proof of your “experience” in the field.

Pro Tip: Most lenders require that you’ve either started the job or have a signed offer letter with a confirmed start date. Your lender will also likely request a copy of your diploma or official transcript.

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What Lenders Look At—and How You Can Prepare

Whether you’re fresh out of college or have been working for a few months, lenders will evaluate a few key factors when you apply for a mortgage:

1. Credit Score

Most mortgage lenders require a minimum credit score of 620 for conventional loans, but some loan programs accept lower scores.

• FHA loans allow scores as low as 580 (or even 500 with a larger down payment).
• Higher scores (740+) can unlock better interest rates and lower monthly payments.

Action Step: If you haven’t started building credit yet, consider opening a credit card and using it for small purchases you pay off monthly. Avoid maxing out credit limits and never miss a payment.

2. Debt-to-Income Ratio (DTI)

This measures how much of your monthly income goes toward debt payments (like student loans, car loans, or credit cards).

• Most lenders prefer a DTI of 43% or less, though some programs allow up to 50%.
• Student loans don’t disqualify you—lenders look at how they’re structured and whether you’re in deferment.

Did You Know? If your student loans are deferred or on an income-driven repayment plan, lenders may count a lower monthly payment, or even just 0.5–1% of the total balance, depending on the loan program.

3. Income

Recent grads often qualify based on:

• A signed job offer letter (with a clear start date and salary)
• First few pay stubs if you’ve already started work
• Employment in a field related to your education

4. Down Payment and Savings

You don’t need 20% down to buy a home—here’s what you should know:

• Conventional loans: As little as 3% down for first-time buyers
• FHA loans: Require only 3.5% down
• VA loans: 0% down for eligible veterans or active military
• Down payment assistance (DPA) programs may be available in your state or city

Example: On a $250,000 home, 3% down is just $7,500.

Pro Tip: You’ll also need some cash for closing costs, which typically range from 2% to 5% of the home’s price. Some lenders or sellers may help cover part of this.

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Best Mortgage Programs for Recent Grads

Some loan programs are especially friendly to first-time or recent buyers:

1. FHA Loans – Great for lower credit scores and smaller down payments
2. HomeReady & Home Possible (Conventional) – Offer 3% down, allow roommate or boarder income, and have flexible credit requirements
3. USDA Loans – 0% down for homes in eligible rural or suburban areas
4. State-Specific First-Time Buyer Programs – Many states offer grants, forgivable loans, or DPA for new buyers, especially recent grads

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June Is the Perfect Time to Start

Why start now, in June?

• Inventory peaks in summer – More homes on the market means more choices
• Interest rates may rise – Acting early could lock in a better rate
• Time to build credit – Even 3–6 months of smart financial habits can make a big impact
• You can close before the school year/holidays – Great if you want to settle in before fall

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Final Thoughts: Start Where You Are

You don’t have to be “100% ready” to talk to a lender. In fact, the earlier you start, the more informed and confident you’ll be when the time is right.

At Welcome Home Mortgage, we work with a lot of first-time buyers—especially recent grads. We’re here to help you understand your options, review your income and credit, and create a step-by-step plan to get you home.

Thinking about buying in the next year or two? Let’s chat now—there’s no pressure, no cost, and no commitment.

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Congratulations grads! You might be closer to your goals than you think! Start small and contact us today to find out your options!

205.358.3423 | [email protected] | NMLS # 2662452