Buy a Home with Just 3% Down Using a Conventional Loan: First-Time Buyer Story
- By Jim Blackburn
- on
Client Profile
- Name: Marcus D.
- Age: 26
- Location: San Antonio, TX
- Profession: Public school teacher
- Income: $52,000/year
- Credit Score: 645
- Home Price: $255,000
- Loan Type: FHA 30-Year Fixed
- Down Payment: 3.5% ($8,925)
The Challenge
Marcus was paying $1,650/month in rent and wanted to buy a home, but like many first-time buyers, he didn’t have 20% saved and his credit score was under 660. He also had $2,500 in student loans, which made qualifying for a conventional loan tricky.
He wasn’t sure he’d qualify for any mortgage until a friend referred him to us to explore FHA options.
The Strategy
We walked Marcus through how an FHA loan could help him:
- Only 3.5% down required
- Gift funds from his mom allowed (she contributed $5K)
- Lower credit thresholds (FHA minimum = 580)
- Student loan payments calculated with flexible DTI rules
- Seller covered $4,000 of his closing costs, further reducing upfront cash needed
The Outcome
Marcus moved into his first home—a 3-bedroom starter house near his school—just 34 days after applying.
- His total out-of-pocket was under $6,000
- Monthly mortgage: $1,523 (lower than his rent)
- He’s building equity and can refinance later to drop FHA mortgage insurance
- His credit has already improved thanks to on-time mortgage payments
Quote from Marcus:
“I thought homeownership was something I’d have to wait years for. The FHA loan gave me a real shot—and now I’m investing in myself, not a landlord.”
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