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First Time Home Buyer Loan Programs

Learn all about what mortgage programs and assistance exists for first time home buyers
Best First Time Home Buyer Programs - Down Payment Assistance - Low Interest Rates

First Time Home Buyer Loans

Are you looking to purchase your first home? Our first time home buyer loans might be the perfect solution to help you obtain the financing you need to buy the home you desire.  We provide excellent home financing options, and encourage you to compare our offered loan terms to other mortgage lenders.

First Time Home Buyer Loan Programs

There are 5 types of first time home buyer loans.  You may select different loan terms, such as a fixed rate or adjustable rate mortgage, and number of years to repay the loan (such as a 30 year fixed rate mortgage).

Types of Mortgages:

  • FHA Loans – Many consider FHA loans to be the best first time home buyer loan .  The qualification requirements are lenient with only a 620 FICO score being needed to qualify for a 3.5 down payment.  There are flexible qualifications related to employment, income, and they also allow down payment assistance.  You can read more about FHA loans below.
  • Conventional Loans –  Conventional mortgages are best for those who can afford to pay a large down payment.  They also are often better than FHA loans for those who have good or excellent credit.  Conventional loans also have low down payment options.
  • USDA Loans – USDA loans are the best option for most who want to purchase a home in a rural and select suburban areas.  They are available for very low income, low income, and moderate income borrowers.  USDA loans do not require any down payment and closing costs can be financed into the loan.  This means you can essentially buy a home with no money out of pocket!
  • VA Loans – Active duty military members and veterans can apply for a VA loan which allows you to buy your first home without any down payment.  These loans are not available to the general public, but exclusively to military/veterans.
  • Jumbo Loans – Any loan that does not meet the conforming or FHA loan limits is a jumbo loan.  If you want to buy a more expensive home, and have the income to qualify, we provide what are known as jumbo loans up to $2,000,000.

The above 5 loans are the main first time buyer options that exist.  We can help you determine which loan is the right fit for you based on your particular needs and eligibility.

FHA Loans for First Time Home Buyers 

For those that do not qualify for a conventional loan, an FHA loan is likely to be the best loan option.  The current basic FHA loan requirements are:

  • Credit – Some FHA lenders are known to allow a 580 FICO score.  All of our home loan products require a 620 credit score.  Some other aspects of credit that are evaluated are past bankruptcies, foreclosures, tax liens, and judgements.  You can read more about the FHA credit requirements, here.
  • Employment – FHA loans require 2 years of verifiable employment history.  It is acceptable to have changed jobs in some instances, especially if you have stayed in the same line of work or industry.  The employment requirements are not very strict, just as long as you show evidence of 2 years history of reliable employment.
  • Debt-to-Income – The most important aspect of your income is not the total amount, but what percentage of your income is used to pay debts.  This is known as your “debt-to-income ratio”.  FHA loans allow a maximum DTI ratio of 43%, which includes your new mortgage payment, and any auto loans, credit cards, or other types of debts that show on credit (such as student loans and personal loans).  The maximum amount your mortgage payment can be compared to your monthly income is 29%.  You can learn more about FHA income guidelines, here.
  • Property – The property must meet “minimum property standards“.  This includes basic standards of living conditions that must be met, which ensures both a safe and healthy home to live in, and to ensure the FHA/HUD that if the home were to foreclose that it has a decent chance of being resold by due to providing a quality living space (the FHA insures the mortgage, if it defaults and forecloses, HUD is responsible to sell the home, so they only insure homes that meet specified standards.

There are certainly both advantages and disadvantages to FHA loans.  The advantages would be the easier qualification guidelines, low down payment option, competitive interest rates, and other appreciable aspects such as loan assumability.  The disadvantages would be costly mortgage insurance.  FHA loans require all loans to pay two types of mortgage insurance.  You can calculate how much FHA mortgage insurance costs using our FHA payment calculator.

Get Prequalified for a FHA First Time Buyer Loan

First Time Home Buyer Down Payment Assistance

You might quality for down payment assistance to help you purchase your home.  This includes a variety of programs and grants that are offered either nationally, or locally (at the city or county level).  A close study of over 2,000 down payment assistance programs concluded that around 87% of homes are eligible for some form of down payment assistance. Many assume these initiatives are exclusively for low income, but most middle class households are eligible for down payment assistance as well.

Our loan specialists have a great deal of expertise on these programs, and can help you understand the qualifications and see if you are eligible.  When you speak to a loan representative, let them know you are interested in finding out what assistance may be available to you.

2018 First Time Home Buyer Tax Credits

The Mortgage Credit Certification (MCC) tax credit provides you an opportunity to reduce your tax bill, as well as enhance your home loan application by reducing your debt-to-income ratios.  How this works, is you can deduct up to $2,000 off your federal tax bill each year.  The MCC allows up to 30% of your annual interest to be eliminated (with the cap being at $2,000).  Some great news, is this can be used in addition to standard mortgage interest deductions!

Frequently Asked Questions About Buying Your First Home

How much do I need for a down payment?
It depends on the type of loan you want.  USDA and VA loans often will not require any down payment.  FHA loans require a 3.5% down payment, which if you get down payment assistance, only .5% is required.  Conventional loans typically require either 3% or 5%.

How do I know if I am ready and prepared to own a home?
It is critical to consider the often unexpected expenses of buying a home. This includes repairs, maintenance, and of course furnishing the home, monthly utilities, and all other expenses that are associated with homeownership. A common mistake is to just look at the difference in rent to your total mortgage payment. Almost every year, you can expect to have to pay for various upkeep to keep the property functional. This can include anything from repairing a hot water heater that broke, to landscaping, and various maintenance.

Something else financial consultants advise is that you have at least 3 months of reserves. This means that you could afford to make your new mortgage payment for at least 3 months in the event that you lose a job or have some other unforeseen circumstance that the savings would be needed for. This is not a requirement for most home loans, but it is good advice to consider.

How much can I afford to borrow?
The amount that you can borrow depends on your particular loan type and income. There are maximum loan limits which are set at the county level. Conforming loan limits are the maximum lending amount allowed for conventional mortgages. FHA loans have their own loan limits. You can search the maximum loan amount for your county for each particular loan type by entering your zip code (or any zip code for the county you want to buy a home in). This will display the maximum amount available for all loan types. This is not necessarily how much you can borrow though, but the max amount in your location. Your personal limits will be based upon your income and how much debt you have. For instance, with most loans, you can not have a mortgage payment and debts exceed 43% of your income.

Can I buy a home without a real estate agent?
It depends on your state and the type of loan program.  For some states, you must use an agent.  In other states, you are not required to use a real estate agent for many loan program, such as conventional mortgages.  However, some loan types require that you use a real estate agent regardless of your location, such as USDA loans.

Can I buy a home if I owe tax debt?
For government-backed loans, such as FHA, VA, and USDA loans, you can buy a home with tax debt as long as you have made a payment plan with the IRS and are not behind on the payments. Any federal debt must be in good standing in order to get a government-based mortgage. If your tax debts have moved into the status of a tax lien, this will prevent you from getting a home loan until it is resolved.

Can I buy a home if I have student loans?
As long as you are not delinquent on the student loan payments and the monthly payments do not cause excessive debt-to-income ratios, you can still get a mortgage.

Can I buy a home without my spouse?
A common question is if you can buy a house without your wife or husband.  The short answer is yes. There are numerous reasons someone may want to exclude their spouse from a mortgage application, such as lower credit, lack of job history or income, or one spouse having excessive debt that could prevent an approval. You may be able to qualify and get a home loan without your spouse.

Can I buy a home after foreclosure?
Most loan programs will require you to wait 3 years before you can buy again after a foreclosure.  There are some instances that you might be able to get an approval in as little as 12 months.  This includes the FHA extenuating circumstances program (more commonly known as the “FHA back to work program”).  If you lost your job due to a job loss or some other event out of your control, you might be able to purchase a home with a FHA loan after only 1 year.

I do not have much credit, can I still get approved?
A 580 minimum is required for a FHA loan. A 620 is required for all others. You may find a lender who can help you if you have poor credit. We do not offer any bad credit mortgage programs.

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Home Loan Programs Available In:

Alabama, Arkansas, Arizona, California, Colorado, Connecticut, Florida, Georgia, Kansas, Louisiana, Iowa, Illinois, Indiana, Maryland, Michigan, Minnesota, Missouri, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, Wisconsin, and Wyoming.