First Time Home Buyer?
Many times, first time home buyers are limited when it comes to cash for down payments and are still looking to establish a solid credit history. With these and other first time home buyer hurdles in mind, what mortgage alternatives are attractive and affordable that can meet the various needs for the first timer? There are a few different mortgage products available, targeted specifically for the first time home buyer.
The Federal Housing Administration (FHA) has loan programs available to first time home buyers seeking a mortgage product that can help the lower income family become home owners. Having limited resources for down payments, lower credit scores and previous credit problems, and other concerns such as lower incomes, first time home buyers choose the FHA mortgage program because underwriting guidelines are typically more lenient than conventional mortgages.
One of the most popular FHA loans is the 203(b). This loan program requires that 3% of the loan amount be paid by the borrower, making the loan total 97%, which helps to keep the cost of down payments and closing costs low. A great feature of this FHA product allows for the borrower to receive 100% of the 3% requirement to be in the form of a gift, whether from family members, a non-profit organization, or a government agency. Qualifying for this mortgage product means debt to income ratios must be met in the state in which the home is being purchased. If interest rates should decrease during the FHA loan term, performing a streamline refinance could be a viable solution. The FHA program for first time home buyers is a wonderful option and has been around for more than 70 years.
First time home buyers that have not saved enough money or have few liquid assets for a down payment this no-money down 100% mortgage product. The 100% mortgage is designed to help first time home buyers or home buyers that have good credit, but can’t afford a down payment. However, closing costs associated with the loan and the transaction may be required of the home buyer. This type of loan can be available for an existing home purchase or new construction.
The 103% mortgage product for the first time home buyer could seem very attractive. With this type of financing, 103% of the purchase price can be borrowed, which helps to pay closing costs associated with the transaction. It’s a loan program that requires a solid credit history and income to make the mortgage payments.
The Veteran’s Administration provides loan programs for active duty military, veterans, and reservists. There are different VA loans available for first time home buyers in the military. Maximum available amounts for VA loan programs change often, so be sure to check with your mortgage professional for current maximum Veteran’s Administration loan amounts. The VA loan program is ideal for first time home buyers looking to purchase a home with no down payment. Finally, VA loans require no mortgage insurance which makes monthly payments less than other mortgage programs and loans.