Becoming a homeowner is still seen by many as the American Dream. However, being a first time home buyer can be a frustrating situation. Traditional mortgages require high down payments and can be fairly difficult to qualify for. Fortunately, there are first-time home buyer grants, programs, and assistance available. The down payment for a mortgage doesn’t need to overwhelm you. These first-time home buyer grants and programs can help you find a home for you and your family.
HUD State First Time Home Buyer Grants
You can check different first time home buyer grants in your state by going to the HUD website. You can also check your local county website for information on first-time home buyer grants and down payment assistance programs. Some states and counties offer various forms of home buyer programs that offer grants for down payments and closing costs to certain buyers.
Good Neighbor Next Door
This home buyer program offered by HUD provides homes for 50% off for teachers, firefighters and police officers. A $100 down payment is all that is required for this great program. Search for available properties in your area on the HUDhomestore website.
HUD Dollar Home Program
HUD (Dept of Housing and Urban Development) sells foreclosed FHA homes that have been on the HUD website for more than 6 months. Local Governments can offer the homes to low income families to help revitalize a community. You can view these eligible HUD homes on the HUD website.
HomeReady HomePath Mortgage
The HomeReady Homepath program is targeted at first-time home buyers. After taking a required buyer education course you can receive 3% towards closing costs on a mortgage loan. A low down payment of just 3% is required, which is even less than FHA loans. This program is exclusively for first-time homebuyers who plan to occupy the property as their primary residence. You will also need to have a real estate agent to purchase a home through the program. You can view a list of properties on the hudhomestore website.
3% down payment mortgage program
Fannie Mae and Freddie Mac are two types of Government sponsored entities that provide a secondary market in buying mortgages. Fannie and Freddie created a mortgage loan program that helps first-time home buyers achieve the dream of home ownership. Named, a conventional 97 mortgage, it allows borrowers to put a low down payment of just 3%. The downpayment, like with FHA loans, can also be a gift from a friend or family member.
FHA Loan Program
FHA loans help more first time homebuyers become homeowners than any other type of mortgage program available. The guidelines to qualify for these loans are much more flexible than a traditional home loan.
You can qualify for an FHA loan with a credit score of 500-579, with a 10% down payment. However, getting approved with a credit score in this range is quite difficult. It is usually recommended to work on improving your credit scores before applying for a mortgage.
If you have a minimum 580 credit score you can qualify for an FHA loan with just 3.5% down. For a $200,000 house that means you will just need $7,000 for your downpayment. The best thing for first-time home buyers is that your downpayment for an FHA loan can be a gift from a family member or friend. This means you can get into your new home with little, or no money upfront.
FHA closing costs are rolled into the loan so you don’t have to pay them upfront.
This home loan program from the U.S. Department of Agriculture is for low to median income home buyers in rural areas of the country. If you are buying a home that is in a USDA eligible location and make an average income or less you could qualify for a USDA loan.
While it may sound like only very small towns and rural areas will be eligible, almost 97% of the country is in an eligible USDA location. USDA loans are perfect for first-time home buyers because there is NO down payment required. They are also less expensive than FHA loans because mortgage insurance (MIP) is a half a percent cheaper for USDA mortgages.
The Veterans Administration has a home buyer program for active and retire Vets. VA loans require NO down payment, making the upfront costs associated with getting a mortgage greatly reduced. The VA loan is the cheapest mortgage available because no mortgage insurance is required. This makes VA home loans perfect for any first time home buyer who is eligible.
Ask your lender
Not every lender will be able to approve first-time home buyers who are using a grant, or some type of assistance. Make sure you ask your loan officer if they are able to use the type of grant you have. Other lenders may be able to help you find down payment assistance or grants for first-time home buyers that will help you achieve your dream of home ownership.