Mortgage Options for First-Time Home Buyers

Jan 15, 2020 | Mortgage


Purchasing a home is a significant milestone. For that reason, before you get to that stage, you have to deliberate on several things. As a first-time homebuyer, what are these considerations and why are they of particular importance?

As the real estate market evolves, the requirements for mortgages become increasingly complex and stringent. Nevertheless, you have the benefit of numerous first-time homebuyers’ programs to help you buy a home—without you necessarily having an excellent credit score or 20% down payment. Let’s look at and explain various federal, regional, and local programs available for first-time homebuyers.

1. FHA loan program

Insured by the Federal Housing Administration, this program is ideal for first-time homebuyers with low credit and small down payment. Subsequently, you need not worry much about the 20% down payment, and good credit score needed to buy a home.

With this program, you can purchase a home with a smaller down payment and lower credit score as compared to conventional loans. Indeed, if you have a minimum credit score of 580 and a down payment of 3.5%, you can buy a home. With a credit score of between 500 and 579, you can still buy a home if you have a 10% down payment.

2. USDA loan

Are you considering moving from the hectic city life to the rustic rural life? Then, consider a USDA loan. However, the home you want to purchase must be within the confines of a USDA-eligible rural area. Also, USDA loans have income limits and target people with lower to moderate incomes. Now, what about the credit score? In this case, your credit score must be 640 or higher to qualify for this loan program. The Department of Agriculture acts as a guarantor for USDA loans.

3. Good Neighbor Next Door Program

This program is ideal for first-time homeowners who are teachers, firefighters, law enforcement officers, and emergency medical technicians. The US Department of Housing and Urban Development sponsors this program.

Equally, with this program, you can get a 50% discount on a home in a region categorized as a ‘revitalization area.’ The Good Neighborhood Next Door Program requires you to live in a home for at least three years after purchase.

4. VA loans

These loans are ideal for military members and veterans. Backed by the US Department of Military Affairs, VA loans are lucrative because of their low-interest rates, no minimum credit score, and no down payment.

Although these loans require a funding fee, you can roll the surcharge into your loan costs. Also, you may enjoy a reprieve from paying the fee if you fall under specific categories of service members.

5. State and local first-time homebuyer programs and grants

Various states and cities use grants and programs to lure new residents into their jurisdictions. They offer grants, low-interest rates, and help with down payment and closing costs.

Buying a home is a fulfilling journey. But before committing to purchasing your dream home, educate yourself about the available programs for first-time homebuyers.

Are you concerned about your ability to own a home with significantly less down payment, low-interest rate, or shaky credit history? Visit our website to get connected with a local Mortgage Loan Originator in your area, we would be happy to work with you to find the right home loan for your needs!