Congratulations - you’re looking to buy your first home! It’s a worthy goal - buying your first home is the first step towards building a stable financial future for yourself and your loved ones.
The current market (and the buying habits of corporate parties), may have some young home buyers scared. If housing is so expensive, how can I compete with companies that pay cash? And how can I possibly save 20% of a down payment with inflation the way it is AND with wages remaining low? By getting a loan that’s tailored to your situation!
Many parties, including the federal government, want to support young people buying homes instead of renting, so there are many ways they attempt to subsidize that behavior. One of those is providing unique loans and opportunities that let prospective first-time home buyers compete with that company that’s been using cash offers to vacuum up properties.
Below are a few loans for first-time home buyers.
The Federal Housing Administration (FHA), part of the Department of Housing and Urban Development), has provided home loans to new home buyers since 1934. This is one of the most common loans for many kinds of buyers, especially first-time home buyers.
The biggest advantage to an FHA loan is that your down payment can be as little as 3.5% of the price of your prospective home. In addition, these loans are some of the best loans available for someone with marks on their credit history: you can still score a loan with a credit score of 580. Loans can be made to those with lower credit scores, but the down payment percentage required increases proportionally.
The downside is that, if you pay less than the 20% down payment, you will need FHA mortgage insurance. That is something to discuss with an FHA-approved lender, which you can find using the directory here.
If you’re not looking to borrow from the feds, then several conventional loan types are available with low interest rates and/or low down payments. For most of these loans, Fannie Mae and Freddie Mac will be the backers. They can be found at many regular banks, credit unions, and mortgage companies.
The restrictions and exceptions for these loans are varied - for some, you might have to be comfortable with a 30-year mortgage, as opposed to a shorter one (such as for the HomeReady loan from Fannie Mae). For others, you might only be able to apply the loan to a primary residence (ex, Home Possible loan from Freddie Mac) or to a selection of previously foreclosed homes (like Fannie Mae’s HomePath Ready Buyer mortgage).
There’s lots of options, so do your research and consult with mortgage professionals to find a loan that fits your situation.
In addition to the above, there are many kinds of specialized loans for people in certain professions (such as veterans, teachers, etc.) or for those who are looking to own homes in a certain area.
Here’s a quick rundown of some of these loans:
As always, all of these loans come with certain restrictions and caveats. Contact us to set up your appointment and get pre-approved for your loan today!
Mark Klein- 132598
NW Mortgage- 128113