You’re ready to buy your first home! Congratulations! But you may have heard that buying your first home can be difficult, especially if you aren’t familiar with the real estate market and the types of mortgages available to you. Thankfully, there are plenty of programs that exist to help first-time home buyers, including these nine types of first-time home buyer programs you need to know about.
1) The Federal Housing Administration (FHA) Loan
The FHA loan is a government-backed loan, which means that you can get a lower interest rate than conventional loans because they are subsidized by the government. The FHA also has down payment assistance programs to help buyers cover their down payments and closing costs. This is an attractive option for first-time homebuyers who don't have the money saved up for a large down payment. They also offer mortgage insurance which protects the lender in case of default. Federal First-Time Home Buyer Programs: These programs vary based on what state you live in as well as whether or not it is your first time buying a house.
2) The Veterans Affairs (VA) Loan
The VA loan is a Federal first-time home buyer program with little to no down payment requirements. The VA loan is backed by the United States Department of Veterans Affairs and does not require private mortgage insurance (PMI). Tax deductions can be taken for points, title insurance, and prepaid expenses paid for in cash before closing. Closing assistance may also be offered depending on location, although typically local first-time home buyer programs provide more support than the federal version.
3) The United States Department of Agriculture (USDA) Loan
This loan, funded by the US Department of Agriculture, is a way for first-time home buyers to purchase a home that would otherwise be out of their price range. The USDA guarantee provides 100% financing, including closing costs and up to 4% in down payment assistance for borrowers who qualify. This type of loan requires you to live in the property for at least one year. The USDA program does not require any monthly mortgage insurance payments or credit score requirements.
4) The Good Neighbor Next Door (GNND) Program
The Good Neighbor Next Door (GNND) Program is a state and local first-time home buyer program. The main goal of this program is to increase the homeownership rate in low-income communities by providing down payment assistance and closing cost assistance. First time homebuyers can receive $10,000 for downpayment and closing cost assistance, plus $5,000 for education. In order to be eligible for this program, you must live within the city limits of Minneapolis or St. Paul, Minnesota.
5) The Fannie Mae HomePath® Program
The Fannie Mae HomePath® Program offers a variety of down payment and closing cost assistance options including:
- Down Payment Assistance - Provides a one-time payment of up to 6% of the purchase price or $7,500, whichever is less.
- Closing Cost Assistance - Provides a one-time payment of up to 4% of the purchase price or $6,000, whichever is less.
6) The Freddie Mac Home Possible® Program
The Freddie Mac Home Possible® Program is a free service that provides homebuyers with first-time home buyer programs and helps them find a lender. The program includes Down Payment Assistance, Government-Backed Loans, Tax Deductions, Closing Assistance, and more. First-time home buyers can get down payment assistance grants to cover up to 5% of their first mortgage loan or up to $10,000 as well as grants for closing costs. There are also tax deductions such as the mortgage interest deduction which is only available if you itemize your taxes.
First-time buyers who are interested in FHA or USDA loans can also use First Time Home Buyer Grants for these types of loans.
7) The Federal Housing Finance Agency's (FHFA) Steps to Homeownership Program
The FHFA Steps to Homeownership Program offers down payment, closing and homeownership education assistance for eligible first-time homebuyers. If you're a first-time homebuyer, the program may be able to help with closing costs, which can be up to $5,000 in some areas. The agency will also provide the first six months of homeownership education online or in person. There are many types of first-time home buyer programs that are geared towards different populations. Some examples include Down Payment Assistance Programs: A wide range of first-time home buyer programs offer financial assistance for purchasing a home by providing grants and loans for down payments and other expenses related to buying a new house or condo. Government-Backed Loans: One type is the U.S.
8) The state housing finance agency (HFA) program
The state housing finance agency (HFA) program provides financial assistance to low and moderate-income households by funding first-time home buyers with affordable mortgage loans. HFA offers down payment assistance, closing assistance, and tax deductions. There are also programs available for veterans, the disabled, and displaced homemakers. For example, Florida's HFA program offers a loan of up to $25,000 in down payment assistance with a 0% interest rate and 25 year term.
9) The Neighborhood Stabilization Program (NSP)
The Neighborhood Stabilization Program is a home buyer program that helps first-time home buyers in low to moderate-income neighbourhoods. It provides grants and loans for housing rehabilitation, down payment assistance and closing cost assistance. In order to qualify, you must be a first-time home buyer, live in a designated NSP area and have an income that is below the average median income for your area.