Applying for a mortgage as a first-time home buyer is very interesting and tough due to the processes involved. There are several factors to take into consideration as a first-timer before you get yourself involve. This may include the state you can make a purchase in, how much you can get, down payment and others.
In this article, we will provide you with the vital information you need to know as a first-time home buyer before you apply for a mortgage loan. First-timers are exposed to several benefits low mortgage rate, down payments, closing cost, credit score if applying for Federal Housing Administration loans. First-timers can get support from state programs, tax breaks, and federally backed loans.
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Category of person that is considered as a first-time home buyer
According to the U.S. Department of Housing and Urban Development (HUD), a first-timer is determined based on the following conditions;
- A person who has not possess a principal resident for three years. On the other hand, at a point where own home but your spouse has, both couple can purchase a house together as first-time homebuyers.
- A single parent who only got to own a home with a former spouse when in marriage; can also purchase a house as a first-timer.
- A displaced homemaker who only owned a house with a spouse.
- A person who has only owned a principal residence not permanently affixed to a permanent foundation in accordance with applicable regulations.
- Someone who has only owned a property that was not in line with state, local, or model building codes.
Programs for First-timers
There are several mortgage loan programs for first-time home buyers. Below are some of the programs to look up to;
FHA Loans – This is a form of loan program for first-timers which issued by the Federal Housing Administration. With a minimum lower credit score of 580 FICO and 3.5 downpayment, you are good to go with this mortgage program.
FHA Section 203(k) – This Loans helps borrowers to purchase a house as well as perform improvement and renovation.
USDA Loans – These loans have 0 downpayment for rural buyers which is used by the USDA Rural Development Guaranteed Housing Loan Program.
VA Loans – These loans issued by the U.S Department of Veteran Affairs provide loan supports to America veterans and military members as well as surviving spouses. With this form of loan, there is no downpayment and mortgage insurance.
Good Neighbor Next Door – This form of program provide loan support to public servants (law enforcement officers, teachers, EMTs and firefighters).
National Homebuyers Fund Down Payment Assistance – They provide support to homeowners and homebuyers on down payments
Energy-Efficient Mortgage – This is also another form of FHA loan that help homebuyers improve their energy efficiency.
Native American Direct Loan – This loan program is for veterans or people married to veterans who are native American home buyers.
What To Know About the Downpayment Toward Equity Act of 2021 – This program increases the maximum first-time home buyer tax credit from $8,000 to $15,000 but based on certain qualifications such as haven’t been a co-signer or own a property for the past 36 months, haven’t exceeded 60% of the area’s median income, be 18 years and above.
First-Time Home Buyer Programs through Banks – This program provide qualified home buyers up to $10,000 toward making a down payment and up to $7,500 toward closing costs.
Local Grants and Program – This form of program provides help by state.