First-Time Homebuyer Programs

If you are thinking of buying a home you may feel an immediate sense of overwhelm.

The prospect of securing a mortgage can leave your head spinning. What is a good interest rate? What if my credit is not perfect? Can I really afford to buy a house? These questions and more will definitely factor into your thinking during this time. The process can become more manageable when you apply for one of the first-time homebuyer programs available. These programs are designed to assist you if you are new to the world of house ownership, or if you have not owned a house in a while. If you are taking the first steps toward securing your new home, learning about the potential programs you can apply for can help you to gain perspective before moving forward, and can certainly take some of the confusion out of the process.

You will not qualify for all of the first-time homebuyer programs, so determine which programs you are eligible for ahead of time and weed out opportunities for which you will be denied. Whether you are seeking a loan as a military veteran or a single parent, there are countless options to choose from to meet your specific needs. The information in this article will help you to determine your eligibility and will assist you in learning more about the programs that will work best for you.

Determining Your Eligibility for First-Time Homebuyer Programs

Before you begin the process of getting a mortgage, you will need to make sure you meet the eligibility requirements for available programs. While many individuals believe you need to be purchasing a home for the very first time to be qualified for these programs, this assumption is not necessarily true. Use the following list to see if you fall into one or several of these qualifying categories:

  • An individual or his or her spouse who has not owned a primary residence in the last three years is qualified for these programs. If you are married and either you or your partner have not owned a primary residence previously, or for the last three years, you are eligible to apply. Only one person in your marriage needs to meet the eligibility requirements to be considered for a first-time homebuyer program.
  • Single parents are qualified for a first-time homebuyer program under certain circumstances. If you are a single parent and the only time you owned property was while you were married to your former spouse, then you are eligible to apply. If you have owned property since leaving your spouse or if you owned property prior to marrying your spouse, you are no longer qualified for a first-time homebuyer program.
  • Individuals who have owned a primary residence that was not attached to a foundation are qualified for these programs. If you owned a primary residence, such as a trailer home, that was not attached to a permanent foundation you are eligible for a first-time homebuyer program.
  • Homemakers who have been displaced following a separation are considered eligible for first-time homebuyer programs. If you only owned property with your former spouse, you are qualified for the application process.
  • Someone who previously owned property that was not in compliance with building codes can be considered eligible for these mortgage programs. If you owned property in the past and it did not meet local building code ordinances or could not be improved to meet these codes, you can apply for a first-time homebuyer program.

Learning the Different Types of First-Time Homebuyer Programs

The programs available to you are typically categorized as either a loan program or a financial assistance program. Loan programs are available for applicants through a variety of commercial and private lenders. Commercial loan programs are designed for individuals who have low credit scores or have not accumulated an appropriate amount of cash savings before purchasing a home. Private loan programs are geared toward individuals with a good credit score who can afford to make a large down payment.

Financial assistance programs are commonly distributed through state and local governments. There is the possibility of acquiring a financial assistance program from the federal government, though these options are less common than others. The federal government will typically provide aid for financial assistance programs during difficult economic circumstances only.

Finding the Right First-Time Homebuyer Program for You

Typically, a commercial lender, such as your credit union or bank, provides a mortgage loan or first-time homebuyer program. The most common first-time homebuyer programs are:

  • FHA loans or Federal Housing Administration loans. FHA loans are available to all qualified candidates and are most often used by first-time homebuyers because of the flexible qualifications needed for approval. For example, if you have a credit score in the mid to high 500 range, you can still receive approval for an FHA loan. While you may need to pay a higher percentage for your interest rate, you can still use this loan to secure your home purchase.
  • VA loans are provided by the Veterans Administration for military veterans and active duty service members in the United States. To be considered for a VA loan, you must have a stable credit score and sufficient monthly income to meet the loan payments each month.
  • USDA Single Family Housing Guaranteed Loan Program is provided by the United States Department of Agriculture and is like FHA and VA loan options. The USDA Program is designed to assist applicants with low or moderate income secure a property in a rural location. If you are looking to purchase your first home in a rural area, this program will best suit your needs.
  • Freddie Mac Home Possible Mortgages also known as the Federal Home Loan Mortgage Corporation assists lenders in providing home buyers with lower down payment percentages. You can apply for this program whether you are a first-time home buyer, or you have purchased property in the past. However, if you are applying for this program as a first-time home buyer, you will need to participate in a borrower education program before receiving approval for a Freddie Mac mortgage.

Additionally, you may be able to utilize a state-by state homebuyer program. Certain states will sponsor home buying programs for first-time buyers and these can become a valuable resource if you find you are having difficulty-gaining acceptance into another program. Most lenders have access to a wealth of first-time home buyer loan servicers, including those listed above. Just as with any other type of purchase, you need to shop around for the best deal and know ahead of time what the current mortgage interest rates are. You can find those listed online via Bank Rate.

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