View Homes

Ready to Buy a House? Find out What Homebuyer Programs You Qualify For

Most of us dream of owning a home one day. Not only does it provide you with space you can personalize and start a family in, but it also comes with a handful of financial benefits.

More than likely, first-time buyers will need to finance the purchase of your home. This is especially true with larger properties or those located in upscale areas.

But, not everyone is aware of what financing programs they can qualify for.

Not sure where to start? Don't worry, we’ve got you covered.

Let's take a look at everything you need to know about first-time homebuyer programs.

Homebuyer Programs

One of the largest obstacles first-time buyers face is not having enough money to put a down payment on a home. Similarly, those with less-than-stellar credit may find it difficult to secure a conventional loan.

Fortunately, though, there's a handful of programs that were created for buyers like this in mind. Let's dive into some of the most noteworthy.

Federal Housing Administration (FHA)

One of the most popular financing options for homebuyers is a Federal Housing Administration loan. This type of financing was specifically designed to help those who may not qualify for conventional mortgages.

FHA loans are renowned for having reasonable credit score requirements and only requiring a 3.5% down payment. Additionally, your debt-to-income ratio (DTI) is less of a factor with this type of financing than it would be with others.

It's worth noting, though, that placing a small down payment will likely require you to purchase private mortgage insurance (PMI), which can add to your monthly payments.

U.S. Department of Agriculture (USDA)

For those who are looking to purchase a property in a rural area and are classified as low-income individuals, USDA loans are often the best option. The term 'rural' here, though, doesn't necessarily mean that you'll be miles away from the nearest town.

The USDA's guidelines on what regions are classified as rural are fairly broad, so you may find that you're able to secure funding for a suburban home.

What makes this type of financing particularly attractive is that it's possible to secure a loan with no down payment in some cases, meaning that those without much money saved up have a solid opportunity to buy a home.

Department Veterans' Affairs (VA)

Those who have previously served (or currently serve) in the military will find that VA loans make their homebuying process far easier than a conventional lender.

Not only do these loans have notably low interest rates, but they're also frequently available with no down payment. The drawback here is that there's a set of requirements you need to meet in order to qualify. These include:

  • A veteran who has served for at least 90 continuous days in the military
  • Someone who has served in the National Guard or Army Reserve for at least six years
  • Someone who has had a spouse die in a military-related incident and hasn't remarried
  • Someone who has been in active duty for at least 90 continuous days

In addition to the above benefits, though, VA loan recipients may deal with lower closing costs than they normally would. This is due to how the administration regulates the amount lenders can charge military veterans. 

Local Programs

If the above options don't work out for you, most states (and even larger cities) have their own local first-time buyer programs that you can take advantage of.

The interest rates, down payments, terms, etc. will be highly variable from region to region, but you'll often find that the requirements are fairly reasonable when it comes to getting approved.

So, don't forget to check out what your city and state have to offer when searching for financing.

Loans/Down Payment Assistance

Sometimes, buyers will find that they qualify for financing but don't have enough cash on hand to meet the down payment requirements. Fortunately, though, there are often local programs that offer financial assistance during this exact scenario.

As with local financing programs, the requirements and terms will vary depending on where you live. In general, you'll find that you can secure a low-interest loan to put toward your down payment.

In certain circumstances, though, you could find that you qualify for a grant or a forgivable loan, making this option that much more enticing.

The requirements will often dictate where you purchase your home and how much it costs, so keep that in mind when considering down payment assistance.

Mortgage Credit Certificates (MCC)

As the name suggests, MCCs allow you to save money on your mortgage. But, they likely do so in a way you don't expect.

A first-time homebuyer who qualifies for an MCC will receive a non-refundable tax credit for a portion of the interest they would pay on their mortgage loan. The logic here is that buyers who save money through this tax credit will have more money to put toward a down payment.

This is especially useful for those who have limited income. It's important to note, though, that you can only receive a maximum tax credit of $2,000 each year. 

Choosing From First-Time Homebuyer Programs Can Seem Difficult

But it doesn't have to be.

With the above information about first-time homebuyer programs in mind, you'll be well on your way to ensuring that you make the decision that's best for you.

Want to learn more about how we can help? Feel free to get in touch with us today to see what we can do.