The first thing you’ll realize when you make the decision to buy a house for the first time is that you’ll need a down payment in place to secure the loan. In most cases, lenders expect you to have at least 20 percent of the home’s sale price saved up and ready to use as your down payment at the time you apply. Unfortunately, coming up with that full amount isn’t always easy, but there are a few great first-time home buyer assistance programs in place to help you out. Here’s what you need to know.
FHA loans are backed by the Federal Housing Administration and are designed to help first-time buyers get into a home with a low-interest loan. Most borrowers are able to use these loans as long as they have a down payment of at least 3.5 percent saved up and a credit score of at least 580. Keep in mind that you’re free to use a larger down payment if you have one—it will just lower the amount you borrow and save you the interest payments over the life of the loan.
Almost every state has down payment and first-time home buyer assistance programs in place that are only available to residents of that state. These can be anything from down payment assistance grants that help take the strain out of saving for a down payment or even low-interest down payment loans that function as a piggyback mortgage, letting you finance the entire purchase price of your home. The exact programs available to you will depend on the state you’re in, so check with your local government.
Fannie Mae and Freddie Mac
Fannie Mae and Freddie Mac are government-backed programs that help lenders provide low-interest loans that require as little as a 3 percent down payment. These programs are best for first time home buyers looking to finance homes that may need additional repairs or those that don’t qualify for other government-backed first-time home buyer assistance programs.
USDA loans help qualified low-income borrowers with small down payments purchase homes in qualified rural areas. These loans have quite a few geographical restrictions, but if you’re looking to move to a rural area, USDA loans are the best option.
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If you’re interested in learning more about the best first-time home buyer assistance programs out there, don’t wait. Contact us today to speak with a member of our team.