First Time Home Buyer Programs | How To Qualify First Time Home Buyer
For a first time home buyer, the first question they may ask is how to qualify for first time home buyer programs. Once a borrower starts doing research, they may come to realize that there are so many programs, so many different first time home buyer down payment options, and mortgage companies all having different guidelines. Some mortgage companies have an internal guideline on top of FHA, VA, USDA, and conventional guidelines called an overlay
and can make it more difficult to qualify for a loan. Later in the article I will cover some key first time home buyer tips, which should make the pre-approval process
go much smoother.
First Time Home Buyer Programs And First Time Home Buyer Down Payment
Reaching out to a experienced Mortgage Loan Originator will help when going through the pros and cons of each first time home buyer program. First time home buyer down payment options vary and some programs do not require a borrower to be first time home buyers.
- FHA 3.5% Down:
- FHA Mortgage are more lenient on credit and income than conventional loans, but have stricter guidelines when it comes to property conditions/appraisals.
- 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%.
- 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 1 unit and 5% for 2-4 units.
- An eligible borrower must meet certain income limits with the Home Possible loan program.
- The Income and Property Eligibility tool can be used to indicate income eligibility.
- Freddie Mac’s HomeOne 3% down payment program:
- Freddie Mac’s HomeOne loan program is for a first time home buyer, which does 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 is for a first time home buyer and repeat home buyers.
- HomeReady’s Income Eligibility Lookup Tool.
- Grant Programs (No Repayment):
- Grant programs do not require a borrower to be a first time home buyer.
- FHA and VA government Loan – 3% or 4% grant with no repayment.
- USDA – 3% Grant with no repayment.
- 4% or 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.
First Time Home Buyer Tips
- Start saving for a down payment.
- There are low down payment options, but most loan programs require private mortgage insurance unless a borrower puts 20% down.
- 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.
- Compare each program.