First-Time Home Buyer Class: Why Take It?

If you think you’re ready to buy a home, but you don’t know where to start, a first-time home buyer class can cover the basics. In some cases, you might be required to take a class to qualify for a low down payment mortgage, a grant or down payment assistance.

Even if the class isn’t mandatory, you’ll learn shopping and budgeting tips, which can lead to a lower monthly mortgage payment. Since many first-time home buyer classes are free, that’s time well spent.

Here’s what to expect if you’re signing up for a first-time home buyer class near you.

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A first-time home buyer class is a workshop designed to help borrowers navigate the homebuying process. Participants who complete the course — which may involve passing a quiz — typically earn a certificate that can qualify them for grants and down payment assistance programs.

If you’re looking for a course on your own, choose one that meets the National Industry Standards for Homeownership Education and Counseling. This indicates that the curriculum provides high-quality, trustworthy advice.

If you’re taking a course to meet a requirement for down payment assistance or other funding, many of the entities that offer such programs will recommend a class that meets these standards.

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The U.S. Department of Housing and Urban Development (HUD) has a nationwide network of housing counseling agencies that provide first-time home buyer workshops, along with one-on-one counseling and other services. Classes are also offered by other providers, including for-profit companies, nonprofits and community organizations.

You can take a first-time home buyer class from:

• Mortgage lenders, such as banks or credit unions.

• State or local housing finance agencies.

• Community development financial institutions.

• HUD-approved counseling agencies.

• Companies that guarantee mortgages, such as Fannie Mae and Freddie Mac.

• Mortgage insurance companies.

• Online education providers.

Classes come in different lengths and delivery methods, most commonly in person or online. Self-service online courses let you learn the material at your own pace.

According to the National Industry Standards for Homeownership Education and Counseling, a first-time home buyer course is about eight hours’ worth of material. However, some online courses that meet those standards deliver a certificate of completion after three to four hours of self-study and a passing grade on a quiz.

A typical class will cover topics such as:

• Budgeting for homeownership.

• Determining how much house you can afford.

• Understanding mortgage loan products and interest rates.

• How to comparison shop real estate agents and lenders.

• Navigating the homebuying process, from home shopping to closing.

• Ongoing costs of homeownership, such as maintenance and taxes.

• Understanding local, state and federal laws.

• How to avoid foreclosure.

Melinda Opperman, chief external affairs officer of Credit.org, a nonprofit provider of homebuying and other personal finance courses, says first-timers, as well as buyers bouncing back from a past financial hardship such as foreclosure, find the classes worthwhile.

Many buyers taking the course, particularly those reentering homeownership following the loss of a home, say, "'I didn't know any of this. I sure would have done things a lot differently,'" Opperman says.

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Many borrowers take the class as a lender requirement to qualify for a particular loan or assistance. However, it can be a wise first step in any homebuying journey. That way, you have some financial savvy before you start making decisions — say, shopping around for a mortgage lender or picking a real estate agent.

Opperman says many participants say they wish they had taken the course much earlier in the homebuying process.

"If they make the decision that they want to purchase a home, they should take the class," Opperman says. The class helps buyers avoid "shoehorning themselves into homes that are just beyond reach," Opperman adds.

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