May 13, 2021 Cody Marchant

What are the Best First Time Home Buyer Programs? 

Why do you want to qualify for a first time homebuyer program? First time home buyer programs save future homeowners thousands of dollars with their benefits.

Lower interest rates, reduced down payments, closing cost assistance, and record low mortgage rates are only a few of the great advantages of first time home buyer programs. First-time homebuyer grants are often the differentiating factor of wanting a home versus owning a home.

What to Consider Before Looking for a First-time Homebuyer Program?

Did you know that you don’t actually have to be a first-time buyer to qualify for first-time buyer grants?

Most government programs consider you a first-time buyer if it’s been three years since you’ve owned a home. However, there are programs like USDA and FHA loans that require the property meet specific qualifications before qualifying and a few local and state programs may have income restrictions.

The good news is that you don’t need a 20% down payment to qualify for a loan. There are even first-time homebuyer programs available for those with bad credit! There are several first-time home buyer grants, first-time homebuyer down payment assistance programs, and more available to help secure the financing you need to purchase the home of your dreams. 

Once you determine whether buying is right for you, it’s time to sit down and configure a realistic budget. Remember, obtaining a mortgage is just one financial part of the homeownership equation. There are still housing costs like homeowner’s insurance, property taxes, utility costs, maintenance costs, and more.

After finding a budget that works for you, it’s time to learn about the different types of lenders. You have traditional bank options, mortgage lenders, FHA community banks/credit unions, and mortgage brokers to choose from. Evaluate all of your options to find the lender that offers the best first-time homebuyer grants and programs for you. 

What are the 10 Best First-time Homebuyer Programs in 2021?

Explore homebuyer programs that could help save you money on your mortgage before you purchase a home.

1.  FHA loan

FHA Loans benefit buyers that have low credit and smaller down payments. If your credit score is at least 580, you’ll qualify with a down payment as low as 3.5%. If your credit scores are between 500 and 579, you may qualify with a 10% down payment.

2.  USDA loan

If you’re considering a home in a rural area, you could qualify for 100% financing through USDA. There are a lot of advantages of USDA loans. There is no required down payment, and your credit score can actually be much lower than what lenders typically require.

3.  VA loan

If you’re an active service member, veteran, or surviving spouse, you may be eligible for a VA loan that requires no down payment.

4.  Good Neighbor Next Door

This loan is for borrowers that are law enforcement officers, firefighters, teachers, or emergency medical technicians. With a Good Neighbor Next Door loan you can save up to 50% off a home’s list price. Although you do get a great discount, there are a few requirements. You house has to be within a designated area and you have to live in the home for 3 years.

5.  Fannie Mae or Freddie Mac

Fannie Mae and Freddie Mac offer a variety of first time homebuyer programs. These conventional loans are for borrowers with strong credit and only require 3% down.

6.  Fannie Mae’s HomePath Ready Buyer Program

If you need help with closing costs and are willing to buy a foreclosed home, check out Fannie Mae’s HomePath Reader Buyer Program

7.  Energy Efficient Mortgage (EEM)

If you want to make your home more energy efficient ( or “green”) but don’t have the money for upgrades, an Energy Efficient Mortgage may be right for you.

8.  FHA Section 203(k)

If you found a fixer-upper home but don’t have the money to make major home improvements, FHA Section 203(k) is the answer to getting your dream home.

9.  State and local first-time homebuyer programs and grants

Before purchasing a home, check your local and state housing authority website to learn more about first-time homebuyer grants in your specific area.

10.  Down Payment Assistance Programs

Most Americans find that the down payment is the biggest obstacle they have when buying a home. Down payment assistance programs were created to help people overcome this issue.  On average, homebuyers save about $6,000 at closing according to a RealtyTrac survey

Should I use a first time home buyer programWhich First Time Homebuyers Program is Best for You?

From down payment assistance to help with closing costs, there are several undeniable benefits of first-time homebuyer programs. First-time home buyers can get help from federally backed loans, local and state programs, and even enjoy tax breaks.

Loan Compass has been assisting first-time homebuyers for years. We help buyers through each step of the home buying process. From loan quotes and services to mortgage calculators, credit scores, loan types, and the loan process.

With so many first-time homebuyer grants and programs available, it’s vital to be informed about which program you can use to get into your dream home while saving the most money.

Speak with an experienced loan officer to find out which first time home buyer program is best for you.