Owning a home is one of the surest ways to build personal wealth. But you don’t need to have “wealth” to get started. There are many first-time buyer home loan programs available — each with their perks and particular qualifying requirements.
FHA Home Loan
This mortgage is the go-to for many, especially first-time home buyers and those with less than ideal credit history. An FHA loan is guaranteed by the government, which allows lenders to expand their qualifying requirements. With an FHA, borrowers can also put less money down — as little as 3.5%!
Low rates also characterize this mortgage. However, keep in mind that FHA loans have an insurance premium built into the monthly payment, and it will continue through the loan’s life.
VA Home Loan
The U.S. Department of Veterans Affairs assists active service members, veterans, and their surviving spouses buy homes with VA Loans. VA loans are extraordinarily generous, often requiring zero down payment or mortgage insurance.
Acquiring this loan may take a bit longer (as the VA must verify military status), but it’s worth the wait, and VA loans have impressive terms.
USDA Home Loan
The U.S. Department of Agriculture has a homebuyers assistance program, and no, you don’t need to buy a farm to qualify. This loan program targets rural areas and provides 100% financing. Note that there are income constraints, and those vary by region.
Fannie Mae and Freddie Mac
Think of Fannie Mae and Freddie Mac as “engines” behind the home loan machine. These federally-sanctioned companies operate with local lenders to offer very attractive mortgage options on conventional loans, including 3% down.
Local Government First-Time Homebuyer Programs
Many state and local governments offer help to first-time homebuyers. The availability of such programs varies, so it’s best to contact us for the most recent information.
FHA 203(k) Home Loans
This FHA-backed loan is designed for those who want to tackle a fixer-upper. It considers the home’s value after improvements and lets you borrow the funds to complete the project as part of your main mortgage.
Originally called the Teacher Next Door Program, it now includes law enforcement, firefighters, and emergency medical technicians. It’s a HUD-sponsored program and features 50% discounts on the list price of homes located in specific revitalization areas. There’s the caveat, however, of having to commit to living in the property for at least 3 years, and these homes are often listed for just 7 days. We recommend being ready with your pre-approval if this is the route you plan to go.