The path to homeownership can be a complicated process and that’s part of what can make purchasing a first home intimidating. Instead of being overwhelmed by your options, get educated –it’s in your wallet’s best interest.
Are You a First-Time Home Buyer?
You might think that the final decider in whether you are considered a first-time homebuyer is whether you have bought a home before – but you’d be wrong. The U.S Department of Housing and Urban Development has its own set of criteria, which allows some borrowers who have bought homes in the past to qualify for loan assistance programs. If you were previously a homeowner, you may retain access to loan assistance programs in a new purchase if:
- You and/or your spouse have not owned a principal residence in the past three years
- You are a single parent whose only previous homeownership was with a former spouse
- You have only owned a principal residence that did not have a permanent foundation, like a mobile home
- You owned a home in the past, but it was not in compliance with state, local, or model building codes, and that property cannot be brought into compliance for less than the cost of constructing a permanent structure.
Do You Meet Any of the Criteria Above?
If you qualify as a first-time homebuyer, you can save money and afford more by taking advantage of the following loan assistance programs:
- FHA Loan
Insured by the Federal Housing Administration, these loans are best suited for those with low capital or low credit scores.
- VA Loan
Insured by the U.S Department of Veteran Affairs, VA loans are available to the person and family of active duty and veteran service members with at least 90 days of continuous service, National Guard or Army Reserve veterans with at least 6 years of service, and surviving spouses of veterans killed in the line of duty or from a service-related incident who have not remarried.
- USDA Loan
Insured by the U.S Department of Agriculture, USDA loans are designed for lower-income home buyers looking to buy homes in rural areas, with suburban areas also included in some states. These loans often do not require a down payment, and typically have low-interest rates.
- Fannie Mae & Freddie Mac Loans
These loans, as opposed to those previously mentioned, are considered conventional. Fannie Mae and Freddie Mac loans allow home buyers to finance up to 97% of a home’s price, making it the most common choice among borrowers with steady employment and good credit.
- Renovation Loan
Home renovation loans allow buyers to more easily obtain a mortgage on a property that needs significant improvement or renovation. These loans cover the full purchase price of a home, plus renovation budgets starting around $5,000.
- Energy-Efficient Loan
In a push to get more homeowners to adopt eco-friendly power sources such as solar panels, the FHA backs energy-efficient loans to empower consumers to buy and use renewable sources of electricity by offering them the choice to bundle the costs of adding such technology to their home into their mortgage.
- Community Heroes Program
To reward the hard work of public servants including firefighters, EMS, police officers, teachers grades 1-12, and other public servants by offering them loans that offer them almost 50% off the list price of homes in “revitalization areas.”
Do keep in mind that this is only a list of Federal loan assistance programs. Your individual state, or even city and/or county most likely offer loan assistance programs and grant to cover down payments and closing costs.