First-time home buyer assistance programs are designed to make it easier for residents to purchase homes. These typically help by lowering the prices of down payments, premiums, interest, requirements, and in many other ways. This way, you do not have to pay very high amounts from the outset and can achieve the American dream faster.
Learn more about all of your home buying options below.
FHA loans are insured by the Federal Housing Administration and typically come with lower down payments and lower credit score requirements than most conventional loans.
First-time home buyers can purchase their homes with a credit score of 580 and a 3.5% down payment or a credit score of 500-579 with 10% of the down payment on the home.
However, with this program you will have to pay mortgage insurance if you pay an initial less than 20% on the amount of the property. This means that your borrowing costs will be higher, since you will have to pay an initial premium and a series of annual premiums. Unlike homeowners insurance, this coverage does not protect you, but the lender, in case you cannot meet the established monthly payments.
The Department of Agriculture guarantees a series of loans to purchase homes in rural areas, and borrowers can obtain up to 100% of the financing. This does not mean that you will have to buy a farm or live with livestock, but rather that the house you buy must be located in a USDA eligible area.
USDA loans have income limits that are based on where you live and are for people with low or moderate incomes. To qualify, your credit must be higher than 640, otherwise you will have to provide additional documentation of your payment history to get approved.
A conventional mortgage is a home loan that isn’t guaranteed or insured by the federal government. Conventional mortgages that conform to the requirements set forth by Fannie Mae and Freddie Mac allow down payments as low as 3% for first-time buyers or lower-income home buyers. Unlike FHA loans, conventional loans allow borrowers to eventually cancel their mortgage insurance or avoid mortgage insurance altogether if they put at least 20% down.
The U.S. Department of Veterans Affairs helps service members, veterans and surviving spouses buy homes. VA loans are especially generous, providing competitive interest rates, often requiring no down payment or mortgage insurance. Although there is no official minimum credit score, most VA-approved lenders require scores of at least 640.
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