There are many more programs for first-time home buyers out there than most people would think there are. Here is a list of the ones that are most widely and typically offered. Given that there are that many options out, there is potential for a good fit for almost everyone.
In this post, we are going to look at some of these options to help you determine which financing option is the most feasible for you to help meet your needs:
- FHA Loans: FHA loans are supported through the Federal Housing Administration who insures these loans. Buyers can purchase their home with a 580 credit score or higher as well as down payments which can be low as 3.5% (for qualifying buyers of certain income levels). Credit scores under 580 may still qualify with additional down payments of 10% or more.
- USDA Loans: The USDA loans are not as popular but the United States Agricultural Department (USDA) offers programs that will help first time home-buyers as well. Buyers will need a credit score of 640 or higher to qualify, otherwise you will need a to have a handwritten under note to apply or even qualify. Down payment amounts can be lower than either FHA or VA loans and 100% financing is provided.
- VA Loan: The Veterans Association Loans are available to anyone who has served in the US military whether it's active military or someone who has retired from the military. Surviving spouses are also eligible. These loans will include competitive interest rates to other mortgages and allow private insurance to be offered on the property and also does not require a minimum credit score to qualify or apply.
- Freddie Mac / Fannie Mae: Freddie Mac and/or Fannie Mae can offer options to first-time home buyers that may not otherwise be available in their given area. These loan programs date back to 1970 and are provided by the Federal Home Loan Mortgage Corporation (FHLMC) and are available to allow Freddie Mac and/or Fannie Mae purchase homes from current home-owners so they can turn around and sell them to help replenish their capital supply of money. 3% down payments for new homes are not unheard of and Fannie Mae also provides home-buyers education programs for their first time home-buyers as well.
- Energy-Efficient Mortgage (EEM): These Energy-Efficient Mortgages (EEM) are offered by the Federal Housing Administration (FHA) provide "green" mortgages to those who are willing to update their residences to be more energy efficient. These improvements can include improved heating-and-air-conditioning units to name a few improvements that are possible.
- FHA Section 203(k): FHA Section 203(k) home loans are available to help families repair and remodel damaged single-family residences before someone is able to live in them again. These loans are provided by the Department of Homeland and Urban Development (HUD) through certain mortgage brokers participating in the program.
- Local Grants and Programs: Many individual states will also offer specific programs to help first time homeowners purchase a home within their state. Here is a list of local state/county sponsored programs for first time homebuyers in the Washington DC metro area:
These are just some of the programs that are offered to help first time homeowners afford the purchase of their first home. Feel free to research other local programs and grants in your state or area that might provide additional assistance that you need to purchase your first home. If you'd like to discuss which one of these programs would be a good fit for you, contact one of our many Loan Officers today.