Buying a home is an exciting time, but the process for first-time home buyers can be nerve-wracking; stressful, confusing, and with seemingly endless paperwork. When you take into account all of the fees and financial requirements also involved, it can almost be too much for some. Luckily, first-time home buyers have access to programs that might make the process a little easier. Let’s take a look at some of them:
Federal Housing Administration
The Federal Housing Administration (FHA) program is popular among first-time home buyers. The FHA backs FHA loans in the event of a foreclosure or bankruptcy, so there is less risk to lenders.
Borrowers can put down as little as 3.5% as a down payment and still qualify for a loan. The trade off is that the borrower has to pay a premium for mortgage insurance each month. This protects the lender in case you default on the loan.
Service members, veterans, and surviving spouses could be covered by the United States Department of Veterans Affairs program. VA loans are one of the only types of mortgage loans that don't require mortgage insurance or a down payment to qualify. Closing costs tend to be lower, and interest rates are typically competitive.
There are eligibility requirements related to your debt-to-income ratio that VA lenders might impose. In most cases, a funding fee is also required for borrowers to pay at closing. This fee helps fund the VA program itself. There’s more in-depth information about the VA loan buying process that you can review if you think you’re eligible for this program.
Fannie Mae and Freddie Mac
These government-sanctioned companies back loans and work with mortgage lenders to offer appealing benefits, particularly to first-time home buyers. A borrower who has a good credit history but not a large down payment can get a loan for as little as 3% down.
State First-Time Home Buyer Programs
Many state and local governments have assistance programs for home buyers. These programs were created mainly to attract new residents to the respective area. Some programs offer low-interest loans, grants, or deferred repayment options. Check with your state’s housing authority website or contact your local HUD-approved housing counseling agency to find out what's available in your area.
Depending on your situation, if you are a first-time home buyer you might save money and time taking advantage of one of these government programs. It's worth the effort to seek them out.
If you have more questions about these government programs or any other aspect of buying your first home, NASB is here to help. Give our experts a call at 855-465-0753, or click here for more information.