Some Popular First-Time Home Buyer Programs

Updated: Apr 25

Buying a home for the first time can be a scary and even daunting task. Unfortunately, there is a lot that goes into buying a home in addition to finding a home that you like and that fits your wish list.

Most of these hurdles are financial. Not only can buying a home be expensive, but getting approval for a mortgage can be a challenge for many first-time home buyers, too. Luckily, there are various programs designed specifically to make purchasing a home for the first time easier.

Here are some of the top first-time home buyer programs that are available.

FHA Home Loans

It can be difficult for a lot of first-time home buyers to qualify for a conventional home loan. That’s because conventional loans require higher credit scores, a good amount of income, a low debt-to-income ratio and a hefty down payment.

In response, the Federal Housing Administration created a mortgage loan program just for this type of buyer. It’s a very popular loan program, too, as people around the country use it.

You only need a credit score of 580 to qualify for an FHA loan, plus you can make a down payment as low as 3.5%. This down payment can also be a gift from, say, a family member, and closing costs can be rolled into the loan.

USDA Home Loans

To help low- to moderate-income buyers in rural areas, the U.S. Department of Agriculture has a home loan program of its own. Like FHA loans, they require lower financial qualifications than a conventional mortgage, plus a down payment isn’t required.

USDA loans are often cheaper than FHA loans, too, because the private mortgage insurance (PMI) rate you’ll be required to pay each month is lower than that of FHA loans.

To qualify, you must meet income eligibility limits for your county, and your home must also be in a qualified rural area. Don’t worry, though; 97% of the U.S. is considered eligible for the USDA program.

203(k) Rehab Home Loans

First-time home buyers are often looking at fixer-uppers because they are cheaper than homes that are newer or completely re-done. This can cause a challenge, though, because these same buyers a lot of times don’t have the cash on hand to make these home improvements or updates once they purchase the home.

That’s where the 203(k) rehab loan can help. It’s a loan program wrapped under the FHA loan umbrella, and it allows home buyers to finance the cost of home rehab, renovation, improvements or updates in the same loan that is used to finance the purchase price of the home.

This type of loan streamlines the process of borrowing for the purchase and rehab of a home, and simplifies the monthly payment into one. The one difference between this and a regular FHA loan is a 203(k) rehab loan requires a credit score of 640.

HUD First Time Home Buyer

The U.S. Department of Housing and Urban Development offers a variety of grants to first-time home buyers throughout the country. These programs are specific by state, though, so you’ll have to research what programs are available in your location. You can do so by visited the HUD’s website.

There are even some states and/or counties in a state that offer assistance programs in the form of grants that help first-time home buyers pay for their closing costs and/or their down payment.

HUD Community Revitalization Programs

HUD also helps revitalize communities across the country by offering two other programs.

The first is called the Good Neighbor Next Door Program. It offers homes to firefighters, police officers and teachers for 50% off the list price of the home. All that is required is a down payment of $100. You can view a list of available properties online here.

The second is called the Dollar Home Program. HUD sells FHA foreclosed homes that have been listed on the HUD website for six months or more. Local government entities can then offer these homes to low-income families as a way to help revitalize the community and fill abandoned homes. A list of these properties is on the HUD website as well.

These are just a few of the first-time home buyer programs that are available across the country right now. While all of these programs are targeted for those purchasing a house for the first time, they are not available to all first-time home buyers.

If you are purchasing a home for the first time, then, it’s important that you thoroughly investigate all of your options for grants or alternative home loans before proceeding. One or more of these programs can get you well on your way to living the American Dream and owning your first home!

Foundation Credit Solutions do more than just fix your credit, we also help you take all of the necessary steps to get you pre-approved for a home loan. To find out more about how we can help you purchase your dream home book an appointment today.

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