The Realty Geek's Blog

The Lowdown on First-Time Homebuyer Programs

Are there still any first-time homebuyer loan programs out there?

How do you spot the fakes, qualify for the good ones and uncover hidden programs that can get you into your dream home with no money down?

First-Time Homebuyer Programs: Myth or Miracle Loans?

If you’ve done any preliminary home shopping at all or have browsed the Internet for loan options, you may have seen many advertisements promising amazing mortgage deals specially tailored to first-time homebuyers. Just to burst your bubble, the truth is that most of these loans aren’t any different than the rest of the mortgage options out there. They are simply slick marketing ploys to get your business. There may be a handful of genuine ones that offer special discounts for certain professionals, or loan officers who specialize in working with first-time homebuyers, but in general it’s all hype.

How to spot a fake: Call and ask the lender what is different about their first-time homebuyer programs. If they can’t give you a fast and straight answer, move on.

Low down payment home loan programs that first-time buyers should really be looking into:

•    VA home loans
•    FHA loans
•    USDA home loans
•    HomePath financing

Note that almost every lender can help you with these loan options.

What Does it Take to Qualify for First-Time Homebuyer Programs?

While each of these mortgage programs and each individual lender offering them has their own slightly different criteria, the principal qualification rules apply equally across the board.

You’ll need:

•    A minimum credit score in the mid to high 600s
•    Proof of income in the same field for the last two years (except for new graduates) and maintaining steady or increasing income.
•    Proof of assets or gift funds for any money required to close
•    Acceptable debt-to-income ratios

The Buried Gold - Down Payment Assistance

We may not all be lucky enough to be born with fat trust funds or have loaded parents to help us buy our first homes, but that doesn’t mean you’ll have to save for decades to buy a house of your own.

There are many special local home buying programs all over the country that provide additional down payment assistance and help with closing costs. States like California run special initiatives for veterans, while Texans can enjoy the Texas Mortgage Credit Program. Individual cities often run their own first-time homebuyer programs too, which can range from loans spread over 30 years, often with deferred payments to grants, providing buyers stay in their homes for a specific period of time.

A little research on the web could mean zero moneyout of pocket on your home purchase. However, it is essential to keep in mind that not all loan programs allow the use of local down payment assistance initiatives.

5 Steps to Buying Your First Home

No matter how great your credit is and how cheap the homes are around you, make sure you educate yourself and are fully aware of all your options before signing up to buy the first home you see.

1.    Research local down payment assistance programs.
2.    Get pre-qualified for a home loan.
3.    Conduct a little preliminary home shopping online so you know what is a good deal when you see one.
4.    Interview and select a qualified real estate agent to assist you.
5.    Apply for your loan and stay on top of the closing process.

Are There First-Time Homebuyer Programs for People With Bad Credit?

There has never been such an attractive time to buy a home, and most of us will never see home buying so affordable again in our lifetimes. So what if your credit isn’t perfect?

It is true that getting approved for a home loan requires better credit than it has in many years. However, there are other options for getting into your dream home today, even if your bank says no.

If you are only a few points off, look into quick fixes for your credit, and in three to six months you could be in the game. Most people can totally turn around their credit and establish new lines of credit within 24 months. This may be a little too long for those wanting to capitalize on today’s low rates and home prices. Check out homes offering seller financing, lease options and rent-to-own programs so that you can get in now, start building equity and lock in the best possible price.

 

Comment balloon 2 commentsEric Proulx • May 18 2012 03:49PM

Comments

Eric -- a good list with links that will be helpful for first time homebuyers.   

Posted by Michael Jacobs, Los Angeles Pasadena Area Real Estate 818.516.4393 (Coldwell Banker Residential Brokerage) almost 6 years ago

Michael - Yup hopefully this will keep the next generation of homebuyers our of trouble. Thanks for the read.

Posted by Eric Proulx (RealEstate.com) almost 6 years ago

Participate