First time buying a home? You chose a great time; nearly half of our clients are first-time homebuyers! We take great pride in being your trusted resource, and are committed to keeping things simple, answering all your questions, eliminating stress, and unraveling the “mysteries” of the home-buying process.

 

There are many loan programs and grants that cater to first-time home buyers, especially on the state and local levels. Our preferred mortgage lender has been passionate about helping first time home buyers for more than 28 years. They have an extensive lineup of loan products designed for first time buyers, full array of choices and lots of great ideas to help home buyers qualify!

We will help you budget for a downpayment and find a great first-time home loan program–as well as a Preferred real estate agent–just right for you.

Downpayment Assistance

Downpayment assistance can be a great resource for a first-time homebuyer with low to moderate income. (A first-time homebuyer is defined as an individual and his or her spouse who have not owned a home during the prior three-year period.) Funds generally come from the federal, state, county or city government; individual banks or employers may also offer grants or other types of programs.

Downpayment assistance programs can often be used with other programs and seller/realtor contributions, also known as layered financing.

Is downpayment assistance “free money”? Most of the time, no. Many downpayment assistance programs come in the form of a second mortgage that has a low interest rate or deferred payments. Grants, however, are funds that do not have to be paid back, unless you sell your home within a certain amount of time.

The American Dream Downpayment Assistance Initiative authorizes up to $200 million annually for downpayment assistance. You may be eligible for ADDI assistance if you are a first-time homebuyer with income not exceeding 80 percent of area median income. (A first-time homebuyer is defined as an individual and his or her spouse who have not owned a home during the three-year period prior to the purchase of a home with ADDI assistance.) ADDI funds may be used to purchase one- to four-family housing, a condominium unit, cooperative unit, or manufactured housing. ADDI provides funds to all states and to local participating jurisdictions that have a population of at least 150,000.
Zero Downpayment Act eliminates the downpayment requirement for families and individuals who buy homes with Federal Housing Authority (FHA) insured mortgages. You may qualify for the Zero Downpayment Act if you are a first-time homebuyer without enough savings for a downpayment, but can easily afford monthly mortgage payments. (A first-time homebuyer is defined as an individual and his or her spouse who have not owned a home during the prior three-year period.) The zero down plan is different from assistance programs like the American Dream Downpayment Act: instead of granting a lump-sum award to qualified homeowners, FHA charges a modestly higher insurance premium to lenders on its zero-down loans.

First-time Homebuyer Loans

Navigating the range of home loans to find the one that best meets your needs can be difficult, particularly if this is the first home you’re buying. To make things easier, the federal government and most states offer insured home loans tailored to first-time homebuyers. These loans offer attractive benefits that can make the home-buying experience less costly and less restrictive. But these loans aren’t for everyone.

  • What Is a First-Time Homebuyer Loan? First-time homebuyer loans offer a low downpayment, reduced interest, limited fees and the possibility of deferring payments. These types of loans are offered by the Federal Housing Administration (FHA) and by most states. The FHA defines a first-time homebuyer as a person who has not owned a home for three years. This includes single parents and displaced homemakers who owned a house previously with a spouse.

A minimum credit score of 600 or above is required for a loan with a downpayment of 3.5%. In addition to your credit score, you will need to provide full documentation of your income and assets and meet the lender’s debt-to-income ratio, which is typically a maximum of 41% to 43% of your monthly gross income that goes toward the minimum payments on all of your revolving and installment debts.

Loan limits vary depending on the median income in the area. In affluent areas, the loan limit on FHA mortgage loans is $625,000, so if you are looking to buy a really expensive home in an affluent area, you might have to look elsewhere.

The American Dream Downpayment Assistance Initiative authorizes up to $200 million annually for downpayment assistance. You may be eligible for ADDI assistance if you are a first-time homebuyer with income not exceeding 80 percent of area median income. (A first-time homebuyer is defined as an individual and his or her spouse who have not owned a home during the three-year period prior to the purchase of a home with ADDI assistance.) ADDI funds may be used to purchase one- to four-family housing, a condominium unit, cooperative unit, or manufactured housing. ADDI provides funds to all states and to local participating jurisdictions that have a population of at least 150,000.
State Bond programs are subsidized by federal funds allotted to each state, but each state requires that the home be owner-occupied as the borrower’s primary residence. You may qualify for a state bond program if you are a first-time buyer or have not owned a home in the past three years. State Bond loans can offer below-market interest rates, often .5 to .75 of a percentage point lower. Closing fees are generally lower. Requirements and availability of State Bond Loans change frequently, so please contact us to learn what’s available in your area.