First Time Homebuyer Loans

Homeownership has long been an integral part of the American Dream. In fact, a recent survey showed that over 80% of millennial renters wanted to buy a home of their own – But most felt that they simply could not afford to.

However, what a lot of these folks may not realize is that there are many specialized programs available to first-time homebuyers that are designed specifically to help remove barriers to owning your first home.

This article will examine 8 such programs that aim to help you land a great mortgage and snag a place of your very own.

1. FHA loan

So here’s a little gem offered by the Federal Housing Administration – The FHA loan. In an FHA loan, it is the Federal Housing Administration who insures the mortgage, meaning with this extra assurance, the loan can be offered with some particularly enticing features. Not only are you offered competitive rates along with very low down payments, but your closing costs are also typically lower than those you would find with a traditional loan.

A secondary benefit is that FHA loans are available at lower credit scores than most – A score as low as 580 will still be considered. Even scores below 580 can still be considered for approval on a case by case basis – However, these approvals would come with the stipulation that you would need a minimum of 10% down payment.

2. USDA loan

Ok, so this one isn’t all that well known, but it’s a fantastic program if available in the area you’re looking in. Yep, the USDA (U.S. Department of Agriculture) has a homebuyer assistance program, and no you don’t need to run a farm to get your hands on one of these!

The USDA home loan gives homebuyers in rural areas access to low, and in many cases no-down-payment mortgage loans. The best part is programs are not overly credit sensitive either, so even if your credit isn’t exactly squeaky clean, you still should have a look.

Income limitations do vary by region though, so it’s best to inquire early on before you begin your house hunting.

3.  VA loan

Unlike the USDA loan mentioned above, this is one of the more well-known programs. The U.S. Department of Veterans Affairs (VA) offers a fantastic option to be considered by active, or former military personnel considering buying a home. The VA loan is designed specifically help active-duty military members, veterans, and surviving spouses buy a home with some of the best mortgage terms available.

VA loans feature low interest rates and require no down payment. As an added bonus, unlike conventional loans, you’re not required to pay for private mortgage insurance (PMI) either! (This is a big deal – Great savings)

As a final cherry on the top, a VA loan is not credit score driven – Meaning even if you have a low score or damaged credit you can still be considered for the loan.

4. Good Neighbor Next Door

Here’s an especially popular program for law enforcement, firefighters, grade-school teachers, and emergency medical techs. Sponsored by HUD, the Good Neighbor Next Door program provides a 50% discount on certain home’s list price – So long as the home is located within “revitalization areas”, and you commit to living in the home for at least 36 months.

5. Fannie Mae or Freddie Mac

Fannie Mae and Freddie Mac are government-sponsored lending institutions. Fannie and Freddie-backed home loans are the most common mortgage options you’ll run across in the U.S.  With the backing of Fannie Mae and Freddie Mac, lenders are able to offer competitive rates and accept down payments as low as 3 percent. One thing to keep in mind though is if you borrow more than 80% of the purchase price of your new home, you will be required to pay private mortgage insurance. (PMI)  Keep this extra cost in mind when calculating the affordability of your new home.

Fannie Mae also provides homeownership education for first-time homebuyers through its “HomePath Ready Buyer” program

6. FHA Section 203(k)

Considering a fixer-upper? Not a bad idea if you’re on a budget, and have a little know-how. Boot-strapping your way to home-ownership!

If this sounds like a path you’d consider, there’s a loan set up to help with exactly that scenario: FHA 203(k). What makes an FHA 203(k) so special is the fact that it takes into consideration the value of the home after you’ve made improvements.

In other words, when that fixer-upper is no longer a fixer-upper – How much will it be worth? The FHA 203(k) loans you money based on that assessment, not how much it’s worth now while in need of attention.

With down payments as low as 3%, why not give it a gander? I’d love to walk you through it.

7. Native American Direct Loan

The Native American Veteran Direct Loan program has helped Native American veterans to purchase homes on federal trust lands. The primary benefit of an NADL loan is that if you’re eligible, you will skip the down payment and PMI!(Private Mortgage Insurance)

These two benefits alone make this worth investigating! Low fixed rates combined with low closing costs make this a no-brainer if you think you might qualify.

8. Local grants and programs

Not all areas offer first-time homebuyer grants. These programs and guidelines vary from state to state and city to city. Before you apply for a traditional home loan, it would be a good idea to inquire first :: Raising hand:: – Happy to help you get an answer fast.