11 First Time Home Buyer Loans and Programs


It is tough to get your first home in the hard real estate markets of today, due to speculators who buy homes to sell for profit, and the rising building costs.

This has made builders focus more on building higher-end homes to make a quick profit. It is even harder when you think that these first time home buyers are in the age range of 32 years and may be owing student loans too.

The saving grace is that there are many first time home buyer programs, loans, and grants, that you can access. This list is a compilation of the best national first time home buyer programs, grants, and loans. Use any of them to get your own home without a 20 per cent down payment or real credit.

11 First Time Home Buyer Programs

Below are Finanticum 11 first time home buyer programs:

1. FHA loan

This loan is best for buyers with low credit and smaller down payments. So if you do not have enough money to give a 20 per cent down payment, don’t worry as FHA loans require fewer down payments. It also needs a lower credit score than usual loans.

As a first time home buyer, you can get a home with a minimum credit score of 500 to 579 and a 10 per cent down payment. The only drawback of FHA loans is the huge charge of mortgage insurance. This secures the lender in case you stop performing on the loan.

2. USDA loan

USDA loan is the best loan for borrowers with lower or modest incomes that want to buy a home in a USDA-eligible rural area. And it is part of the first time home buyer programs that you should try immediately. The U.S. Department of Agriculture, or USDA, gives guarantees for home loans in some rural areas.

You can have access to 100 per cent financing for your home purchase. But you must buy a home in a USDA-eligible area. USDA loan is for folks who earn moderate incomes. You need a credit score of 640 or more to qualify for a loan. And if your score is lower then you will have to give additional documents of your payment history to receive approval for this loan.

3. VA loan

VA loan is best for active-duty military members, veterans, and their spouses. Also, U.S. military members qualify for this loan. It is guaranteed by the VA and the U.S. Department of Veterans Affairs for eligible borrowers. Also, VA loans have lower interest rates than most other loan types and do not need a down payment.

However to get the loan you have to provide a funding fee. But, you can roll this fee into your loan costs. And depending on your case, some service members may be exempted from paying it. Additional VA loan perks include no PMI or minimum credit score. If you find it hard to pay your mortgage, the VA can negotiate with the lender on your behalf to give you some relief.

5. Good Neighbor Next Door

This loan is best for Teachers, law enforcement officers, firefighters and emergency medical technicians. And, it is on the list of first time home buyer programs that you can sample. The Good Neighbor Next Door scheme is supported by the U.S. Department of Housing and Urban Development (HUD). This program provides housing aid for law enforcement officers and firefighters. It also supports emergency medical technicians and pre-kindergarten through 12th-grade teachers.

If you qualify for this program you could get up to a discount of 50 per cent on a home. But its listed price must be in areas called “revitalization areas.” You can use the program’s website, to search for properties available in your state. But you must agree to live in the home for at least 36 months to get it.

6. Fannie Mae or Freddie Mac

This loan is best for borrowers with excellent credit but small down payments. Fannie Mae or Freddie Mac are government-sponsored enterprises that lay down borrowing rules for the loan they want to buy from usual lenders on the secondary mortgage market.

To get a mortgage through them, you need to have a minimum down payment of 3 per cent and a credit score of 620 or more. In addition, Homebuyers must have a clean financial and credit history to be eligible.

Also, they accept a debt-to-income ratio as high as 50 per cent depending on the case. But you will still have to pay for PMI since you are required to put in less than a 20 per cent down payment. The good part is that you cancel immediately your loan-to-value ratio drops below 80 per cent.

6. Fannie Mae’s HomePathReadyBuyer Program

This is another one of those first time home buyer programs best for the home buyers who are willing to buy a foreclosed home. And Fannie Mae’s HomePathReadyBuyer program is for buyers interested in foreclosed homes that now belong to Fannie Mae.

Eligible home buyers need to take an online homebuyer education course. Also, they could receive up to 3 per cent to pay for closing costs toward the purchase of a HomePath property. The real problem is to be able to find a HomePath property in your market. This could be tough since foreclosure accounts are few listings in the market today.

7. Energy-efficient mortgage (EEM)

This program is best for homebuyers who want to make their home more energy-efficient but do not have up-front cash for carrying out these improvements.

If you are able to make your home more energy efficient it is good for the environment and lowers your utility bills. Also, to foot the bill, you can get an energy-efficient mortgage, or EEM loan, that is insured through the FHA or VA programs.

An EEM loan allows you to pin the cost of energy-efficient improvements for new insulation, a more efficient HVAC system or double-paned windows on your primary loan upfront. And you can do all this without a bigger down payment.

8. FHA Section 203(k)

This is another part of the first time home buyer programs that are best for homebuyers who want to buy a fixer-upper but do not have a lot of cash to make major home upgrades.

If you dare to take on a fixer-upper but do not have the additional money to pay for renovations, you can get an FHA Section 203(k) loan. Also, this loan is supported by the FHA and computes the home’s value after the upgrade.

Besides, you can borrow the funds you need to pay for home upgrade projects and add the costs into one loan with your primary loan amount. But you will need to make a down payment of at least 3.5 per cent. Also, the upgrade must not cost more than $5,000.

9. State and local first-time homebuyer programs and grants

This program is best for first-time homebuyers who need closing costs or down payment help. Also, as a way of attracting new residents, many states and cities offer first-time homebuyer grants and programs. The help comes in the form of grants that you do not have to repay. It could also be in the form of low-interest loans that you can defer repayments to cover down payment or closing costs.

Note that some programs may have income limits. So before you buy a home, check your state’s housing authority website for more information.

10. Native American Direct Loan

The Native American Direct Loan is one of the first time home buyer programs, that a new homeowner could also access. This program is best for qualified Native American veterans who wish to buy a home on federal trust land.

Besides, the Native American Direct Loan offers to finance to Native American veterans who qualify to buy, improve or build a home on federal trust land. This loan is different from the usual VA loans because the VA is the mortgage lender.

Also, the loan has no down payment or private insurance requirements. And the closing costs are low and there is no limitation to only one property. You can buy more than one. But not all states qualify for this program.

11. Employer Assistance

More employers now give some housing assistance to their employees. The benefits to the employer are more committed staff. Boosting productivity and increasing employee retention. The assistance given to the employee includes linking staff to local financial assistance programs. They also offer homebuyer education or payment assistance for the various services the staff joins during the home buying process. So, find out the level of assistance your employer offer to first time home buyers.

Conclusion: Take action using any of the strategies to get that first home you have always dreamed of fast.
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