Posted by Christine Owens on August 10, 2017
4 Loan Options for First-Time Home Buyers
The purchase of your first home is a thrilling but very big decision. Not only is there a lot to learn about the real estate market so that you can find the ideal home but you also have to secure financing. While some first-time home buyers have a 20% (or more) down payment, the majority do not. Because of this, many first-time home buyers are interested in what different types of loan programs are available to them that will help them get into the home that they want. Fortunately, as a first-time home buyer you have multiple options available to you that you may be eligible for. Each of these options has their own unique qualifications (and there may be more options for your depending on where you live) so speak to an experienced and trustworthy mortgage lender about which loan is right for your unique circumstances.
4 Loan Options for First Time Home Buyers
- FHA Loan
- FHA loans are very popular for first-time home buyers because they have broader acceptance standards so those with a low down payment (as low as 3.5%) or poor credit history may qualify for an FHA loan. If you do qualify for an FHA loan, you will have to pay mortgage insurance premiums that protect the lender should you default on your loan. Those mortgage insurance premiums must be paid for the life of the loan unless you refinance.
- USDA Loan
- If you are not familiar with a USDA loan, don’t worry – most people are not. But the U.S. Deartment of Agriculture does have a loan program for people that live in rural areas but it does not have to be a farm. The loan provides 100% financing but the applicant must meet lender requirements including credit score and income.
- VA Loan
- If you are a veteran, active service member, National Guard member, reservist, or surviving spouse you may be eligible for a VA loan. With a VA loan, you would receive 100% financing which means that you do not need to have a down payment or pay private mortgage insurance. Though the loan is generous, you still must be able to prove a good debt-to-income ratio, credit score and meet lender guidelines.
- Good Neighbor Next Door
- The Good Neighbor Next Door loan is a HUD-sponsored program that was originally called the “Teacher Next Door Program.” The reason it was renamed was that it was expanded to include members of law enforcement, firefights, and emergency medical technicians. Through the program an eligible applicant would be able to receive a 50% discount on a home’s listed price in select regions that are called “revitalization areas.” Through the program, the borrower must commit to living in the home for at least 36 months.