Todd Sumamno
If you’re a first time home buyer, there are probably a lot of questions on your mind. After all, there’s a lot to think about in regards to buying a home, whether it’s your first time, your seventh time, or your hundredth time! As a first time home buyer, though, you have a few extra resources to help you along the way.
Since it’s your first time buying a home, you should definitely take the time to research the available buyer loans and programs. Once you buy your first home, you’ll no longer be able to take advantage of them so it’s important that you do so while you can. If you do, you may just find yourself saving money!
For first time home buyers that are interested in learning about the unique loans and programs available just for you, read below!
Available First-Time Home Buyer Loans and Programs
#1. FHA Loans
FHA loans are backed by the Federal Housing Administration and are available to first time home buyers with low credit scores. Even those with no credit history can be approved, making fha loan a great option for first time buyers!
As FHA loans have a down payment requirement of only 3.5%, they are a more affordable option for first time buyers. You won’t have to worry about saving up for a 20% down payment. This, of course, will depend on your credit score, but FHA loans typically have lower down payment requirements than conventional loans.
This being said, you will have to pay mortgage insurance premiums for a certain amount of time which can increase the cost of the loan, but the additional cost is always disclosed upfront so you aren’t caught off guard.
Qualifying for loans is a common obstacle many home buyers face, so looking ahead at how to qualify for FHA loans if you’re interested in this type of loan.
#2. Low Down Payment Conventional Loans
Buying a house with a low down payment is possible even with conventional loans. The low down payment Conventional 97 program is available to first time buyers and has a 3% minimum down payment requirement.
The qualification requirements are a bit more than an FHA loan, but if you have a credit score of at least 620, you’ll likely be approved. If your credit score is higher or you have time to improve your credit score before applying for the loan, then your chances of being approved for a lower down payment rate and loan are higher.
With a Conventional 97 loan, you will have to pay private mortgage insurance which increases the monthly cost of your loan. If you’re able to pay off your loan quickly or reach the 20% equity threshold set by most lenders, though, you may request to end your PMI.
#3. VA Loans
If you aren’t in a rush to be approved for a loan and you or your partner are a veteran or military member, you can apply for a VA loan.
Backed by the federal government, VA loans have no down payment or private mortgage insurance requirements. There are no credit or income requirements set by the VA, though individual lenders may decide to set a minimum in order to avoid risky borrowers.
It will take some time to process a VA loan so if you’re pressed for time, it may be better to take out another loan and later refinance to a VA loan. As long as you or a family member is a member of the military or a veteran, it does not matter what type of loan you want to refinance. If you’re eligible and you’re willing to wait the necessary time, a VA loan is a great option.
#4. USDA Loans
Are you looking for a more rural home location? If so, a USDA loan is right up your alley! These loans are backed by the United States Department of Agriculture and are available for anyone looking for a rural home. You don’t even have to be a farmer to qualify! As long as your home is in a USDA-eligible area, you can be approved.
USDA loans offer up to 100% financing and have no down payment requirements. There are income limitations and your home has to be located within an eligible area, but this type of loan allows you to buy a home without worrying about providing a down payment.
Unfortunately, USDA loans do have fees, but they are a fantastic option for low income families that aren’t looking to live in a suburban or city area.
#5. Good Neighbor Next Door
If you or your partner are a firefighter, law enforcement officer, pre-kindergarten through 12th-grade teacher, or an emergency medical technician, this loan is for you!
The Good Neighbor Next Door program provided through HUD offers a discount of 50% on homes within a specified “revitalization area”. You’ll have to commit to living in the home as your main residence for at least three years, but if you’re looking for a way to afford your first home, this is a fantastic opportunity.
To find eligible homes within your state or the state where you plan on moving, visit the HUD homestore site.
#6. HomePath Ready Buyer
Designed specifically for first time buyers, the HomePath Ready Buyer program by Fannie Mae makes buying foreclosed homes easier. You’ll be required to take and complete a homebuyer education course but afterwards, you may receive up to 3% in closing cost assistance.
Only certain properties are eligible for the program, but you can find them through Fannie Mae’s dedicated site that’s linked above. It’s important to note that many of the homes will need repairs so if you aren’t able or willing to put some work into your first home, this probably isn’t the best choice for you.
Benefit from Dedicated First Time Buyer Loans and Programs
Even if you’re eligible for regular mortgages or can afford something else, it’s highly recommended that you take advantage of the first time buyer loans and programs that are available. You’ll likely save money and when your buying a home, every little bit counts. The extra that you save can later go into making home improvements so that you can make your new house into your perfect home.
Brittany
