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first time home buyer programs

Best First Time Home Buyer Programs

There’s no shame in asking for a little help with buying a home these days. Truth be told, it’s actually fairly common for a first time home buyer to receive some form of assistance in getting approved for a home mortgage loan—after all, buying a home is likely the largest purchase one can make in their lifetime.

However, with myriad of options available to first time home buyers, it can be hard to narrow down which program offers the most bang for your buck. The following first time home buyer programs are among the most commonly used in the mortgage industry—but be sure to read the fine print, as each of them comes with their own particular set of perks, as well as prerequisites.

1. Home Possible Mortgages

As Freddie Mac’s flagship mortgage program for first time home buyers, the Home Possible Mortgage is a conventional loan that offers a low down payment option that has helped countless first time buyers realize their dream of homeownership.

The following are some key features of this mortgage program:

  • Access to fixed-rate mortgages means a stable monthly payment
  • Reduced private mortgage insurance (PMI) costs
  • Flexible closing cost options
  • No cash-out refinancing

*In order to qualify for this program, and reap the benefits of things like low PMI, you must complete a home ownership education class.

2. Home Ready

As Fannie Mae’s version of a first time home buyer program, a Home Ready Mortgage is ideal for low- to moderate-income borrowers who are seeking a conventional loan. This program offers expanded eligibility for financing homes in designated low-income, minority, and disaster-impacted communities.

Benefits include:

  • Down payment as low as 3%.
  • Flexible sources of funds can be used for the down payment and closing costs with no minimum contribution required from the borrower’s own funds
  • Conventional home financing with cancellable monthly mortgage insurance
  • Reduced PMI

*Similar to Freddie Mac’s mortgage program, an applicant that chooses to go with Fannie Mae must also participate in a home ownership education course in order to qualify for the program’s many perks.

3. FHA

The Federal Housing Administration (FHA) offers a loan program with a low down payment option and other flexible guidelines. FHA loans allow borrowers to put down 3.5% of the contract sales price of the home—which compared to other lenders is far more favorable. This program is also great for first time borrowers because it allows a person to have all of their down payment gifted from a parent, relative or close friend.

*The only drawback of this program is that you must have PMI for the life of the loan.

4. USDA

The United States Department of Agriculture (USDA) offers a variety of home mortgage loan programs. The Rural Home Loan Program allows eligible suburban and rural homebuyers to obtain 100%, no-money down mortgage financing. This program features a variety of benefits, including;

  • Comparatively low mortgage rates
  • Loans up to 100% of property value
  • Reduced monthly mortgage insurance

*To qualify for this program you must fall within certain income limits. There are also property eligibility restrictions.

But wait…there’s one more type of first time home buyer program you should know about.

Community-specific First Time Home Buyer Financial Assistance Programs

It all depends upon the community in which you live, but a lot of cities across the U.S. offer financial assistance in the form of a grant for first time home buyers, so long as you purchase a home in that community. A lot of times the money provided can be applied to closing costs or be used towards the down payment.

*Every city is different in the program it offers, so be sure to do your homework.

Blue Water Mortgage has helped countless first time home buyers get approved for a home mortgage loan using one of the above programs. Our seasoned mortgage brokers are well versed in the details of each specific program and can help you determine which is right for your individual situation. Contact us today for any questions you have about these or other first time home buyer programs.

Roger is an owner and licensed Loan Officer at Blue Water Mortgage. He graduated from the University of New Hampshire’s Whittemore School of Business and has been a leader in the mortgage industry for over 20 years. Roger has personally originated over 2500 residential loans and is considered to be in the top 1% of NH Loan Officers by leading national lender United Wholesale Mortgage.