5 Premier First Time Home Buyer Mortgage Loans
A lot of low down payment options do not require a borrower to be a first time home buyer. Often lenders have a internal guideline on top of an agency guideline that can make qualifying for a mortgages more difficult or do not offer all. These loan programs promote the American dream of home ownership through their low down payment options.
Low Down Payment Options
There are options when it comes to qualifying for low down payment mortgages. Some grants do not even require a down payment.
FHA Down Payment Assistance Grant
The down payment assistance FHA grant:
- Is 2% to 6% of the first total loan amount to pay for down payment and/or closing costs.
- Not required to be a first time home buyer.
- Minimum credit score depends on the grant, but starts at a minimum of 620 FICO.
- There are income limits, but the FHA grant has higher income limits than the conventional grant.
Conventional Down Payment Assistance Grant
The down payment assistance conventional grant:
- Is 5% grants of the first total mortgage amount.
- Or a 2% grant that requires only 1% borrower contribution.
- Not required to be a first time home buyer.
- Harder to qualify for than the FHA grant due to requiring a higher credit score for an Automated Underwriting Approval and lower income limits.
3.5% Down FHA Loan
An FHA loan:
- Is more lenient on credit than most loan programs.
- Not required to be a first time home buyer, but limitation on having multiple FHA loans.
The down payment for 1 to 4 unit properties:
- Is 3.5% for credit scores 580 FICO and above.
- 10% for credit scores under 580 FICO.
3% Down Conventional Loans
The conventional 3% down payment loan programs are:
- Home Possible that allows 3% on one unit and 5% on 2 to 4 unit properties.
- HomeReady, which is available to first time and repeat home buyers.
- HomeOne that has no income limits or geographical restrictions.
100% Financing
100% financing for VA loans and USDA loans:
VA loans are more lenient on credit than most first time home buyer mortgage loans.
- Available to eligible Veterans.
USDA loans are available to borrowers that live in an eligible rural area and meet income requirements.
Getting Pre-approved
Guideline vary depending on the down payment options. Borrower should contact a licensed Loan Officer so they can:
- Gather information and go over the pros and cons of the loan programs available.
- Get a list of documents that are required for underwriting and processing.
- Start the pre-approval process.
The pre-approval process starts with a borrower gathering documents and sending them over to a licensed Loan Originator. A Loan Originator will run the Automated Underwriting System (AUS) – not just go over verbal information for a pre-approval letter.
Getting properly pre-approved alleviates stress during the underwriting process.
TBD Underwriting Pre-approval
For more difficult case scenarios, a borrower can go through the process of a TBD underwriting pre-approval.
- This is the strongest type of a pre-approval a borrower can get.
- The underwriter looks over credit and capacity before issuing a pre-approval.
