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Many home loan programs have been specifically created for first time homebuyers. These loans feature low down payments and approval guidelines that make it easier to qualify. Some of the more popular first time homebuyer programs are listed below. Please fill out our on-line application and let us help match your requirements with a lending program. | |
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WHAT IS A FIRST TIME HOME BUYER LOAN? First time homebuyer programs are designed to make it easier to become a homeowner. Some programs offer lower interest rates, some feature easier qualifying, and some a combination of both. Housing Finance Agency (HFA) programs features low interest rates. The Mortgage Credit Certificate (MCC) program features reduced taxes. Community Home Buyer programs feature low down payments. Loans are available to qualifying buyers with very small down payments; including no down payment. |
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FHA OR VA FOR FIRST TIME HOME BUYERS? FHA (Federal Housing Administration) and VA (Veteran's Administration) loan programs are not limited to first time home buyers but they are great programs for buyers with small or zero down payment. FHA and VA loans can be especially advantageous when combined with a HFA or MCC first time homebuyer program.
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WHO CAN UTILIZE FIRST TIME HOME BUYER PROGRAMS? Contrary to what you may expect, some first time homebuyer programs are available to previous homeowners. Most programs specify that you can't have owned a home in the past three years. Some programs restrict only the past 12 months. Many first time homebuyer programs are for people with moderate incomes, and there can be other restrictions.
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The community homebuyer program reduces the down payment to 3%, which must be the borrower's own funds. Closing costs can be gift funds, a grant, or seller assistance up to 3% of sale price. This loan requires the homebuyer to take a class on home ownership. Upon completion of the class, the homebuyer receives a certificate that reduces cash requirement and expands the qualification ratios.
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FHA mortgages are government insured loans. FHA mortgages can be fixed or adjustable rate. The advantage of a FHA mortgage is the low down payment and flexible qualifying. The entire down payment and closing costs may be a gift from family or employer. A qualified borrower can assume FHA loans. Sellers can pay up to 6% of the sale price towards buyer's non-recurring and prepaid closing costs.
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VA mortgages are government guaranteed home loans providing 100% financing to a qualified Veteran, National Guardsman or Reservists. As of this writing, only fixed rate VA loans are offered. There is a one time funding fee, added to the loan, of 2% for first time users and 3% for second time or more. This fee may be waived for qualified disabled Vets. This loan may be assumed.
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HFA loans are typically offered by state agencies (For example in California the program is HFA - California Housing Finance Agency). HFA loans utilize special bond issue funds to provide funds at a lower interest rate. HFA loans are typically offered as FHA, VA or conventional loans, but at a rate lower than current market rates. The total amount of HFA funds may be limited and therefore funds may not always be available. In most cases HFA programs cannot be combined with other bond issue programs such as MCC. Contact a lender for details and funds availability or let us help you by filling out our Information Request Form.
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These special loans have the advantage of low down payment and elimination of mortgage insurance with as little as 5% down payment. This program is not restricted to first time homebuyers but is an excellent loan for buyers with good credit and 5% of their own funds for down payment. It's perfect for first time homebuyers who live in areas with high cost housing because there is no limit to maximum earnings.
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