Are you planning to buy your first home? If you are, congratulations! Your property is about to become a part of the 79.36 million owner-occupied housing units in the United States. Owning a home offers you many benefits, including the chance to build equity, enjoy living security, and exercise more control over costs like utility bills. However, your financial position may be undermining your goal of becoming an owner. But it doesn't have to be that way. You can use first-time homebuyer programs to overcome such challenges and purchase your first home.
What are First-Time Homebuyer Assistance Programs?
First-time homebuyer programs are tailored for new property buyers who need financial assistance. But, generally, to be eligible, the prospective homebuyers must have strong credit scores and meet specified income restrictions. Although the name of these programs may lead you into believing they are only for people who've never owned a home before, that is not entirely true. You can also apply to a first-time homebuyer program and receive assistance if you have not been the owner of your principal residence for the last three years.
Popular First-Time Homebuyer Assistance Programs
Here are some of the most popular first-time homeowner assistance programs:
1. VA loans
As the name suggests, VA loans are offered by the United States Department of Veteran Affairs (VA). This program helps service members, surviving spouses, and veterans purchase homes with little to no down payment. Eligible persons also avoid private mortgage insurance and enjoy reasonable interest rates. Therefore, in a nutshell, the generous terms that typically accompany a VA loan include no prepayment penalties, no mortgage insurance, and reduced or no down payment.
2. FHA loans
FHA loans are government-backed mortgages insured by the FHA (Federal Housing Administration). Unlike most conventional loans today, an FHA loan requires lower down payments and credit scores. Note that third-party service providers like mortgage lenders typically administer these loans. The FHA is only responsible for insuring them. To qualify for an FHA loan, you must meet certain requirements, including a debt-to-income ratio of <43%. You must also have proof of employment and a steady income, and the property in context should be your primary residence as the borrower.
3. USDA loans
Did you know the United States Department of Agriculture (USDA) isn't solely responsible for food safety, plant inspections, and the food pyramid? It's also significantly involved in rural development. One of the ways it does that is by helping rural families transition into homeownership. That means they offer eligible people the chance to own a home, enjoy a better quality of life and live in stronger communities, especially through USDA loans. However, you must be a US resident, permanent resident alien, or non-citizen national residing in an eligible rural area to qualify for this assistance program. The loans are also normally allocated to needy families only.
For more information about first-time home buyer programs near you, contact a local service.