If you’re using a first-time home buyer loan program, does that put you at a disadvantage when competing for a home?
In theory, it shouldn’t matter. A seller wants to sell their home, and as long as the offer is valid, competitive, and financed by a reputable lender, it should be treated the same as any other offer.
But in reality? Some sellers and listing agents do have biases against certain types of loans—especially those associated with first-time buyers, FHA, or VA financing.
If you’re buying a home in Texas, including Dallas, Fort Worth, Houston, or Austin, and plan to use a first-time home buyer loan, here’s what you need to know to stay competitive.
Why Do Some Sellers Prefer Conventional Loans?
Many sellers and real estate agents perceive conventional loans as “stronger” offers, even though FHA and VA loans are just as valid.
Here’s why:
- Conventional loans are seen as lower risk. Sellers assume that conventional buyers have higher credit scores, more financial stability, and fewer underwriting hurdles—even though this isn’t always true.
- FHA and VA loans have stricter appraisal guidelines. If a home has repairs needed, an FHA or VA appraisal may flag issues that require fixing before closing. Some sellers prefer to avoid this.
- Seller concessions are more common with first-time buyer programs. Buyers using down payment assistance or FHA financing often ask for seller help with closing costs, which may not be as appealing to a seller comparing multiple offers.
- Faster closings with conventional loans. While FHA, VA, and first-time buyer loans do not necessarily take longer, some agents assume conventional loans close faster.
These factors mean that if a seller has multiple offers, they might prioritize a conventional loan over an FHA, VA, or first-time buyer loan—even if the price is the same.
How to Make a First-Time Buyer Offer More Competitive
If you qualify for a first-time home buyer loan but worry about getting your offer accepted, here are some strategies to improve your chances.
1. Get Pre-Approved (Not Just Pre-Qualified)
A pre-approval letter from a reputable lender shows sellers you’re serious and that your finances have already been reviewed. This can help ease concerns about financing delays.
2. Work With a Lender Who Calls the Listing Agent
A great lender will proactively call the listing agent to reassure them that you’re a strong buyer and that the loan is on solid ground. The Mortgage Mark team does this for every client to help strengthen your offer.
3. Offer a Higher Earnest Money Deposit
Earnest money shows the seller you’re committed. Offering more than the standard 1% of the home’s price can make your offer stand out.
4. Limit Contingencies Where Possible
While it’s never smart to waive important protections, offering flexibility on things like the option period or appraisal timelines can make a first-time buyer offer more attractive.
5. Consider a Conventional Loan Pre-Approval
If you qualify for both FHA and conventional financing, you may want to have your lender issue a pre-approval letter for a conventional loan. This could help eliminate seller concerns, even if you ultimately choose FHA or a first-time buyer program.
Should You Avoid Using a First-Time Home Buyer Loan?
Not necessarily. If a first-time home buyer loan is the best option for your financial situation, it’s still worth using.
The key is working with a knowledgeable lender and agent who can:
- Present your loan in the best possible light
- Communicate with the listing agent to reassure the seller
- Structure the offer in a way that makes it competitive
At the end of the day, the right home and the right seller will see beyond the loan type and focus on your financial strength as a buyer.
Winning in a Competitive Texas Market
If you’re buying a home in Dallas, Fort Worth, Houston, Austin, or anywhere in Texas, and you’re using a first-time home buyer loan, your offer can still be strong and competitive with the right strategy.
- Get fully pre-approved before making an offer.
- Work with a lender who actively advocates for you.
- Make an offer that stands out in other ways—earnest money, flexibility, or a strong financial position.
At the Mortgage Mark team, we’ve helped thousands of first-time buyers successfully purchase homes—even in competitive markets. If you’re ready to buy a home and want expert guidance, reach out to us today.
Have questions? Connect with the experienced, Dallas-based Mortgage Mark team and get started.
Mark Pfeiffer
Regional Sales Manager
Loan Officer, NMLS # 729612
(972) 829-8639
MortgageMark@MortgageMark.com
Mortgage Mark
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