First-Time Home Buyer Programs


First-Time Home Buyer Programs

Most first-time home buyers find it overwhelming to choose a satisfying mortgage program. Although many first-time buyers have little money for a down payment and insufficient credit history, these shouldn’t stop them from looking into what mortgage programs are most available to them.

The following are a few of the most common home buyer programs and grants that can help you get a mortgage loan.

USDA loan

The U.S. Department of Agriculture has a rural housing program which is designed for home buyers looking in a rural area. The rural housing program is one of the most popular programs for the first-time home buyers. Here are some advantages of this program:

  • Zero down payment. This is the only program without any down payment besides the VA program.
  • The minimum credit required is only 640 with most lenders.
  • The interest rates are much lower than conventional loans.

FHA loan

The Federal Housing Administration offers a program which allows first-time buyers to purchase a house with only 3.5% down payment. The program is also great for the first-time buyers because the down payment can be gifted from an approved source and it doesn’t have to be your own funds. The only disadvantage of this program is that you must have private mortgage insurance (PMI) for the life of the loan.

VA loan

The VA loan program is specifically for veterans or active military service member. There is no down payment and minimum credit score required and the interest rates are much lower than other mortgage loans.

Good neighbor next door

Sponsored by HUD, the good neighbor next door program provides housing aid for law enforcement officers, emergency medical technicians, and firefighters. You can receive a discount of 50% on a home’s listed price in regions known as “revitalization areas”.

Freddie Mac and Fannie Mae

The Home Possible Mortgage is Freddie Mac’s flagship mortgage program for first-time home buyers. It provides a low down payment option and helps to reduce the PMI costs. There is a similar program provided by Fannie Mae called “HomeReady mortgage program”. This helps home buyers with limited resources and alternate sources of income afford mortgages.

Local programs

Many states also have a variety of down payment assistance programs for first-time buyers. For example, New Jersey offers what it describes as “below-market” interest rates with zero points on 30- year loans for single family and multi-family homes.