Loans for First-Time Homebuyers: Which One is Right for You?

First-time homebuyers, it’s time to learn all about loans for first-time homebuyers! Homeownership comes with both advantages and disadvantages, but no matter which side of the coin you’re on, a loan is probably involved. However, not all loans are made the same; there are several different types of loans out there to meet the needs of first-time homebuyers. That’s where this guide on loans for first-time homebuyers comes in!

Loans for First-Time Homebuyers: Which One is Right for You?

FHA loans

An FHA loan is a type of mortgage that allows buyers with low to moderate income and credit scores to buy a home. It requires a down payment of 3.5% and the monthly payments are generally lower than other types of loans, making it an attractive option for first-time buyers. The downside of this type of loan is the required upfront mortgage insurance which can be costly when interest rates rise. And there are more restrictions on how much you can borrow and how much money you have saved up as a down payment before you can qualify for an FHA loan. For example, some lenders may require 20% down while others only require 10%. 

The government offers a few programs designed to help first-time buyers afford their homes. For instance, there’s the Housing Choice Voucher Program (or Section 8), or public housing authorities provide another form of assistance in the form of rent vouchers for those without steady employment or funds to cover housing costs. 

Mortgage assistance programs also offer financial aid and assistance in purchasing your first home.

VA loans

A VA home loan can provide an excellent option for first-time homebuyers, but it's important to understand the benefits and drawbacks of this type of loan before making a decision. The VA guarantees a portion of the loan, which means if the borrower defaults on their mortgage payments, they may lose some or all of their down payment. Additionally, unlike other types of loans, VA mortgages do not allow cash-out refinancing options like other conventional loans do. If you want to take money from your home equity, you will need to refinance into a different type of loan. 

The biggest benefit of a VA loan for first-time buyers is that there are no credit score requirements. So even if you don't have great credit or any credit at all, you could still qualify for a VA loan as long as you served in the military and have enough income to pay your bills. Talk with a lender today to see what kind of help for first-time buyers might be available for you!

USDA loans

If you are a first-time home buyer, the USDA loan program may be one of the most affordable and flexible options available to you. But, unlike other loans, this option does require at least a small down payment. If you are eligible to take advantage of the USDA loan program's benefits--such as low-interest rates and no down payment requirement--consider talking to a HUD-approved lender who can help determine your eligibility. Help For First-Time Buyers - Homes Of St. Louis As a first-time home buyer, you might be overwhelmed with all the various lending options that exist. Help For First Time Buyers has been helping people just like yourself get on their feet and live in their dream homes since 1955. Our team of experts will work with you to find the best loan or mortgage solution based on your specific needs. We offer many different financing products that help first-time buyers reach their dream of owning their own home while still being able to stay within their budget.

Conventional loans

A conventional loan is a great option for first-time home buyers because there are no credit requirements. Plus, the process typically takes less time than an FHA or VA loan. However, you will have to pay PMI (Private Mortgage Insurance) until you have at least 20% equity in your home. The good news is that you’ll only have to do this for a few years. The bad news is that your monthly payments will be higher than with an FHA or VA loan. But if you can manage these higher payments, it’s worth it since Conventional loans don’t require a down payment and closing costs. If you can afford to make the larger payments, Conventional loans are a great choice for first-time homebuyers.