Without the help of first time home buyer grants, coming up with a large down payment can be difficult.
Many mortgage lenders require around 20 percent of the price of the home to be paid in full.
For a $200,000 home, that is a whopping $40,000. Getting that much money together to apply towards a down payment is difficult for many people, especially a first time home buyer.
Current homeowners can sell their property and use the equity they make on that home to go towards the down payment.
First time buyers do not have the ability to do that since they don’t already own a home.
Because of this, there are a few first time home buyer programs that are designed to help first-timers purchase a home more easily.
Some programs like the FHA Home Loan Program reduce the down payment amount to as low as 3.5 percent, while other programs Good Neighbor Next Door can save teachers, firefighters and police officers up to half off of the purchase of a home.
One of the best first time home buyer tips residents can receive is to look into the various programs for down payment assistance. To learn more about these programs, read the sections below.
Popular First Time Home Buyer Programs
There are many programs for first time home buyers that help make the “American dream” of owning a home more attainable.
Keep in mind that most first time home buyer grants are administered on a state and local level. There are not as many first time home buyer federal grants offered on a national level.
Most counties in each state create and manage their own programs to help buyers in the area.
Because of this, in addition to looking through the options on this list, it is also important to explore the options offered in your city. Below are a few of the most popular programs.
FHA Home Loan Program
One of the best programs for first time home buyer down payment assistance is offered through the Federal Housing Administration (FHA). The administration provides mortgage insurance on loans made by FHA-approved lenders.
Having the loan insured by the FHA allows the mortgage lender to reduce the down payment requirement to as low as 3.5 percent.
If you are a first time home buyer with bad credit, the FHA program may be an option for you. This is because the program offers more lenient qualifications.
However, keep in mind that if you have bad credit for home loans the first time buyer down payment can go up to 10 percent through the FHA.
Veterans Administration Loans
If you are a current United States service member, a veteran, or an eligible surviving spouse, you may qualify for a VA loan.
A purchase loan allows you to buy a house with a competitive interest rate, often without needing to pay a down payment or private mortgage insurance (PMI). This program is a great option for anyone who qualifies.
Private lenders, like banks and mortgage companies, provides the loans while a portion is guaranteed by the VA. This assurance allows the lender to provide applicants with better terms.
Good Neighbor Next Door (GNND)
Teachers, firefighters, officers of the law and emergency medical technicians may qualify for the GNND Program. This is one of the first time home buyer government programs offered through the HUD.
This program provides certain homes with a whopping discount of 50 percent off of the listing price if you work in one of those qualifying professions. Although it isn’t specifically limited to first time buyers, it can drastically help you if you are.
To be eligible, you must purchase a property that is in a HUD revitalization area. You must also commit to living in the property for at least 36 months.
Fannie Mae offers a mortgage program that requires a first time home buyer down payment of just three percent. The program also allows for more co-borrower flexibility, meaning that buyers can sign with co-borrowers that do not intend to reside in the property.
For example, parents that won’t be living in the home can help their children secure the mortgage by co-borrowing on the loan.
Also, the program accepts additional income sources when qualifying for the loan.
For example, rental payments (such as rent payments from a basement apartment) can help to qualify a buyer.
Ready Buyer HomePath Program
Also related to the HomeReady Mortgage is the Ready Buyer HomePath program, which is also offered through FannieMae. You can receive a first time home buyer credit of three percent towards your closing costs if you participate in this program and purchase a HomePath property.
To receive this credit, you must complete an online first time home buyer class and save your certificate of completion. You must then have your real estate agent include the certificate when you submit your offer on a HomePath property.
Infographic: 10 First Time Home Buyer Tips
The First Time Home Buyer Tax Credit 2016
Many people are curious about the first time home buyer tax credit 2017 or 2016 that is included in the U.S. tax code.
There was a tax credit program offered to first time buyers years ago, but it ended in 2010. However, if you were a first time house buyer and purchased a home between April 9th, 2008 and April 30th, 2010 you may still be able to take advantage of the program.
Depending on the year you purchased your home, you may meet the qualifications to be eligible for a tax credit that may need to be paid back.
To learn more, speak with your tax accountant about your options.
Infographic: Mistakes First Time Home Buyers Make
Top First Time Home Buyer Programs
- HUD First Time Home Buyer Programs
- FHA Home Loan Program
- USDA Loans
- VA Loans
- 203k Rehab Loans
- Good Neighbor Next Door Program
- HUD Dollar Home Program
- HomeReady HomePath Mortgage
- Native American Direct Loan