First Time Home Buyer Programs | How to Qualify First Time Home Buyer
Are you looking for first time home buyer programs? There are benefits to every loan program and the down payment options vary depending on the program. This article will cover first time home buyer tips and how to qualify for loan programs.
Lenders often have different underwriting standards or an tougher guideline when it comes to underwriting, called an overlay, which can make the loan process and underwriting more difficult than some lenders. There are some first time home buyer tips like getting properly pre-approved for a loan, working with a lender with easier guidelines, and choosing a lender with favorable terms.
First Time Home Buyer Down Payment Options
You can reach out to a experienced Mortgage Loan Originator who can help when going through the pros and cons of each loan program. First time home buyer down payment options vary and some programs do not require this to be your first time.
FHA 3.5% Down Payment for 580 or Higher FICO Credit Score
- For a 580 or higher FICO, the minimum down payment is 3.5%.
- For a FICO score lower than 580, the down payment is 10%.
FHA grants are also available to repeat buyers depending on your credit score.
Freddie Mac’s Home Possible 3% Down Payment Program
The Home Possible loan program was designed for first time home buyers, move-up borrowers, and retirees, which require a minimum down payment of:
- 3% for a 1 unit property.
- 5% for a 2-4 unit property.
An eligible borrower must meet certain income limits with the Home Possible loan program. The Income and Property Eligibility tool can be used to determine income eligibility.
Freddie Mac’s HomeOne 3% Down Payment Program
Freddie Mac’s HomeOne loan program is for a first time home buyer, which do not have borrower geographic or income limits.
Fannie Mae’s HomeReady 3% Down Payment Program
Fannie Mae’s HomeReady loan program has a minimum down payment of 3%, but has income restrictions. This loan program does not require for it to be your first time buying a home and repeat buyers are still eligible. To see if you are eligible for this loan program, you can use Fannie Mae’s Area Median Income Lookup Tool.
Grant programs allow repeat buyers. Options for grant programs include:
- Either 3% or 4% grant of the total loan amount for FHA and VA loans.
- 5% down payment assistance conventional loan program.
- Power purchase 2% grant, which is 1% minimum borrower investment and 2% power purchase grant with no repayment required.
When choosing a loan program, talking to an experienced Mortgage Loan Originator will help when going through the pros and cons of each loan program. Interest rates and down payment options vary depending on the program.
5 Home Buying Tips
- Even though grants are available, you should try and negotiate a seller credit to help with closing costs associated with a purchase.
- There are low down payment options, but most loan programs require private mortgage insurance unless a borrower puts 20% down or chooses lender paid mortgage insurance (LPMI).
- Determine how much you can afford before shopping for a mortgage by going through the pre-approval process and getting a pre-approval letter.
- Talk to an experienced Mortgage Loan Originator to go over pros and cons of each mortgage program.
- Choose a loan program that best fits your needs.
You can go over tips for first time home buyers, down payment, and closing costs, which will help make for a smoother loan process.