First time home buyer mortgage programs
Understanding the many types of home loans that are available to first-time home buyers is one of the most crucial aspects of your home-buying journey.
To determine which choice is ideal for you, you should become familiar with them all.
We will start with the most popular options and then work our way down.
FHA home Loan
FHA loans are insured by the government entity Federal Housing Adminstration hence the name FHA.
A very popular loan for first time home buyers and fairly easy to qualify for.
Best Features for an FHA loan:
- FHA loans provide buyers with less than perfect credit the opportunity to buy a home.
- The down payment is low compared to other programs. Only 3.5% is required.
- Down payment assistance is available to those who can qualify
- Interest rates on an FHA loan are generally lower than a conventional loan
- Debt to income ratio requirements are more lenient than other loan programs.
- Can add a co-borrower to help with qualifying
- Can purchase the following types of properties: Condos, townhomes, single family homes, modular, manufactured homes, mobile homes, multi-family.
Who qualifies for an FHA loan?
- A minimum credit score of 620 but can go as low as 580 on a case by case basis
- A down payment of 3.5% of the purchase price is needed
- Steady and consistent income
- Loan amount must be within the loan limit for the county the home is being purchased in
- Home must be your primary residence
Drawbacks of an FHA loan
- Mortgage insurance is required and will be on the loan for life
- A funding fee of 1.75% is charged on all loans. Funding fee can be rolled into the loan.
- Condos have to be FHA approved
- No investment properties allowed
- There are loan limits based on county.
Are you ready to apply?
VA Home Loan
Borrowers must be active duty military or a veteran to qualify
If you are eligible for a VA loan, then this is the best mortgage program with a $0 down payment. (Better than the FHA program listed above)
VA loans are administered by the Veterans Administation but they don’t provide the financing. They just provide the rules that lenders have to follow for their program.
Best Features for VA Loan:
- Just like FHA, the VA loan also provides buyers with less than perfect credit the opportunity to buy a home.
- The down payment is ZERO
- No Mortgage Insurance
- Interest rates on a VA loan are generally lower than a conventional loan and typically better than FHA
- Debt to income ratio requirements are more lenient than other loan programs.
- Can purchase the following types of properties: Condos, townhomes, single family homes, modular, manufactured homes, mobile homes, multi-family.
- If rates drop, VA loans are easy to refinance with a streamline option.
Who Qualifies for a VA loan?
- A minimum credit score of 620 but can go as low as 580 on a case by case basis
- Home must be your primary residence
- Steady and consistent income is required
- Must be eligible for a VA loan
Drawbacks of a VA Loan
- If you are not a disabled veteran, you are required to pay a funding fee.
- Condo complexes have to be VA approved
- Strict property requirements
- No investment properties allowed
- Due to stricter property rerquirements, sellers may prefer to accept an offer from a buyer with another loan type. You can read more about this >> How to Get your Offer Accepted in a Seller’s Market and this one >> Why Should I Pursue a Conventional Loan Over a Government Loan?
VA Loan Application
Get your VA loan started today!
Are you ready to apply? Start the process by completing the form below.