Posted by Ryan Barnett ● Jul 13, 2020 9:00:00 AM

Loan Programs Available for First-Time Home Buyers

first-time home buyers

Often, first-time home buyers do not have enough cash for a down payment, and this alone hinders their drive to purchase their dream home altogether. Luckily, there are government sponsored loan programs to help. Here is a break down of the different loan programs available for first-time home buyers, as highlighted by BankRate.com.

1. FHA Loan

  • Brief description: A program requiring smaller down payments and lower credit score requirements
  • Recommended Takers: Buyers with low credit and smaller down payment capacity
  • Other Remarks: Would require payment of private mortgage insurance

2. USDA Loan

  • Brief description: A loan guaranteed for rural homes that are USDA-eligible, it could offer borrowers 100% financing
  •  Recommended Takers: Borrowers with low or moderate incomes
  • Other Remarks: Have limits based on place of residence and income

3. VA Loan

  • Brief description: Qualified members of the U.S. military avail of this loan, which is backed by the U.S. Department of Veterans Affairs
  • Recommended Takers: Qualified U.S. military members (active members, veterans, and their spouses)
  • Other Remarks: Include no minimum credit score and usually has lower interest rates, but may require a funding fee

4. Good Neighbor Next Door

  • Brief description: This HUD-sponsored loan could give qualified participants up to 50% of the home’s listed price
  • Recommended Takers: Teachers, law enforcement, firefighters, emergency medical technicians
  • Other Remarks: The buyer must commit to living in the property for at least 36 months

5. Fannie Mae or Freddie Mac

  • Brief description: These two are government-sponsored enterprises requiring a 20% down payment that can be canceled once the loan-to-value ratio is below 80%
  • Recommended Takers: Borrowers with strong credit but a minimal down payment
  • Other Remarks: They require a minimum of 3% down payment, a minimum credit score of 620, and a clean record

6. Fannie Mae's HomePath ReadyBuyer Program

  • Brief description: This program could give up to 3% closing assistance toward purchase
  • Recommended Takers: First-time home buyers who need help in closing costs or are willing to buy foreclosed homes
  • Other Remarks: It requires attendance in an online home buying education course

7. Energy-Efficient Mortgage (EEM)

  • Brief description: This type of loan could help you tack the cost of energy-efficient upgrades like insulation and HVAC
  • Recommended Takers: Home buyers who lack up-front cash and prefer energy-efficient homes
  • Other Remarks: Can be costlier than other loans, especially for your primary loan upfront

8. FHA Section 203k

  • Brief description: This FHA-backed loan assists homeowners for major house renovations
  • Recommended Takers: Home buyers who will purchase a fixer-upper but doesn’t have a lot of cash
  • Other Remarks: Improvements must cost more than $5,000 to apply. It also requires a minimum of 3.5% down payment

9. Native American Direct Loan (NADL)

  • Brief description: NADL allows buying, improving, or building homes on federal trust land
  • Recommended Takers: Eligible Native American veterans
  • Other Remarks: Requires no down payment and not limited

 

Name of Program

Brief Description

Recommended Takers

Other Remarks

FHA Loan Program

A program requiring smaller down payments and lower credit score requirements.

Buyers with low credit and smaller down payment capacity.

Would require payment of private mortgage insurance.

USDA Loan

A loan guaranteed for rural homes that are USDA-eligible, it could offer borrowers 100% financing.

Borrowers with low or moderate incomes.

Have limits based on place of residence and income.

VA Loan

Qualified members of the U.S. military avail of this loan, which is backed by the U.S. Department of Veterans Affairs.

Qualified U.S. military members (active members, veterans, and their spouses).

Include no minimum credit score and usually has lower interest rates, but may require a funding fee.

Good Neighbor Next Door

This HUD-sponsored loan could give qualified participants up to 50% of the home’s listed price.

Teachers, law enforcement, firefighters, emergency medical technicians.

The buyer must commit to living in the property for at least 36 months.

Fannie Mae or Freddie Mac

These two are government-sponsored enterprises requiring a 20% down payment that can be canceled once the loan-to-value ratio is below 80%.

Borrowers with strong credit but a minimal down payment.

They require a minimum of 3% down payment, a minimum credit score of 620, and a clean record.

Fannie Mae’s HomePath ReadyBuyer Program

This program could give up to 3% closing assistance toward purchase.

First-time home buyers who need help in closing costs or are willing to buy foreclosed homes.

It requires attendance in an online home buying education course.

Energy-efficient mortgage (EEM)

This type of loan could help you tack the cost of energy-efficient upgrades like insulation and HVAC.

Home buyers who lack up-front cash and prefer energy-efficient homes.

Can be costlier than other loans, especially for your primary loan upfront.

FHA Section 203(k)

This FHA-backed loan assists homeowners for major house renovations.

Home buyers who will purchase a fixer-upper but doesn’t have a lot of cash.

Improvements must cost more than $5,000 to apply. It also requires a minimum of 3.5% down payment.

Native American Direct Loan

NADL allows buying, improving, or building homes on federal trust land.

Eligible Native American veterans.

Requires no down payment and not limited.

Remember that most of these programs are specific to a location and strict with their requirements for qualification. Being assisted by a real estate agent will also help benefit you. They may assist in finding and viewing homes, negotiating the offer and loan, and completing the paperwork.

RyanBarnett

Ryan Barnett is one of the top performing listing agents in the greater Orlando area. He is also the principal of Market Connect Realty, a full service real estate team that connects buyers and sellers through leveraging technology, extensive marketing, and top level service.

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