Buying a home is an exciting time, but the process for first-time home buyers can be nerve-wracking, stressful, confusing, and with seemingly endless paperwork. Considering the fees and financial requirements involved, it can almost be too much for some. Luckily, first-time home buyers can access programs that might make the process easier. Let’s take a look at some of them:
Federal Housing Administration
The Federal Housing Administration (FHA) program is popular among first-time home buyers. The FHA backs FHA loans in the event of a foreclosure or bankruptcy, so there is less risk to lenders.
Borrowers can put down as little as 3.5% as a down payment and still qualify for a loan. The trade-off is that the borrower has to pay a premium for mortgage insurance each month. This protects the lender in case the borrower defaults on the loan.
Veteran's Affairs
The United States Department of Veterans Affairs program could cover service members, veterans, and surviving spouses. VA loans are one of the only mortgage loans that don't require mortgage insurance or a down payment to qualify. Closing costs tend to be lower, and interest rates are typically competitive.
VA lenders might impose eligibility requirements related to your debt-to-income ratio. In most cases, borrowers must also pay a funding fee at closing. This fee helps fund the VA program itself. If you think you’re eligible for this program, you can review more in-depth information about the VA loan-buying process.
Fannie Mae and Freddie Mac
These government-sanctioned companies back loans and work with mortgage lenders to offer appealing benefits, particularly to first-time home buyers. For example, a borrower with a good credit history but not a large down payment can get a loan for as little as 3% down.
Many state and local governments have home buyer assistance programs. These programs were created mainly to attract new residents to the respective area. Some programs offer low-interest loans, grants, or deferred repayment options. Check your state’s housing authority website or contact your local HUD-approved housing counseling agency to find out what's available in your area.
Depending on your situation, if you are a first-time home buyer, you might save money and time by taking advantage of one of these government programs. It's worth the effort to seek them out.
If you have more questions about these government programs or about buying your first home, NASB is here to help. Call our experts at 888-661-1982 or click here for more information.
