What is a first time home buyer loan and who is a first time home buyer?
A first time home buyer loan is designed to help people purchase their first home. The programs vary depending on where you are purchasing and what is available to you. A first time home buyer program is mostly targeted towards people who are purchasing a home for the first time, but some programs will give assistance to people who have owned before, as long as they haven’t owned if several years.
Some benefits made available to first time home buyers:
- Down Payments: First time home buyer loans give buyers the ability to make small, or no, down payments.
- Interest Costs: Organizations that offer these loans help to pay interest charges and help borrowers qualify for loans with lower interest rates and, in turn, a lower monthly payment.
- Grants: Money is given to borrowers that can be put towards closing costs, a down payment, and improvements to the home after the purchase.
- Loan Forgiveness: These loans provide a cancellation of all – or some portion – of mortgage debt, over a long period of time, to encourage buyers to stay in the home long-term.
- Help with Fees: First time home buyer loans set limits on how much lenders are allowed to charge at the closing of the loan.
- Deferred Payments: Some form of these loans don’t need to be repaid, and don’t charge interest, until you pay off the house, which is usually done by selling the home and moving. These loans may also act as your down payment, or part of it.
Keep in mind that all loans do not guarantee that you will get any of the offers above. What benefits you get depends on where you live and your financial circumstances.
Where to find loan programs
Start your search for loan programs on the HUD website, and go through their home buying programs. You can also just search the internet, with your state and city of residence to see what programs are available to you. If you are a veteran, teacher, or disabled, there may be additional programs to help you.
What are the restrictions?
- Dollar Limits: Many programs put a limit on the amount of money you are allowed to use to buy a home, so you won’t be able to buy the most expensive property.
- Owner-occupant: These loans are given out for a home that will be your primary residence. If you are planning on renting the home, you will not be able to use these types of loans.
- Health and Safety: The home must meet certain requirements, such as being in good condition and free from safety hazards, such as asbestos or lead-based paint.