Buying a home is a major milestone in many people’s lives. But as many homeowners will tell you, buying a home is not for the faint of heart. The process of finding, making an offer, and closing on a home can be complicated. Add to that the stress of finding the right home loan and many first-time homebuyers might feel overwhelmed. However, it’s important to know that there are many programs out there designed to make that first step into homeownership easier. Here’s a look at some of the most popular home loans for first-time homebuyers.
FHA loan
FHA loans are very popular with buyers, and it’s easy to see why. A portion of these loans is guaranteed by the Federal Housing Administration which means the lender is protected should a buyer default. FHA loans are great for buyers with lower credit scores, and they only require a 3.5 percent down payment. Be aware, however, that FHA loans require buyers to pay a Mortgage Insurance Premium (MIP), and the home must be used as a primary residence. Buyers may also qualify for an FHA 203(k) loan that is specifically for fixer-uppers. This type of loan takes into consideration what the home will be worth after renovations so that buyers can borrow the money to make those repairs.
VA loan
Are you a service member, a veteran, or a surviving spouse? Then you may qualify for a VA loan. These loans are guaranteed by the U.S. Department of Veterans Affairs (VA) and are particularly generous. Applicants do not need excellent credit, a down payment, or mortgage insurance. Interest rates for VA loans tend to be favorable, and loan limits are more than adequate to find a great home.
USDA loan
Another loan that’s good for first-time homebuyers is the USDA loan. This mortgage program sponsored by the U.S. Department of Agriculture is targeted toward rural and suburban homebuyers. Like VA and FHA loans, the USDA is not the lender in most cases; it simply guarantees the loans. These loans require no down payment and interest rates are low. Applicants should generally have a credit score of at least 640, though assistance is still available for those with lower credit or no credit history.
Fannie Mae HomeReady
The Fannie Mae HomeReady Mortgage is another great choice for first-time homebuyers, especially those with low income. Buyers pay as little as three percent for the down payment, and it only requires a credit score of 620 or greater. Money for the down payment can come from multiple sources, including gifts. This loan does require mortgage insurance until the owner’s equity reaches 20 percent.
Freddie Mac Home Possible
Finally, the Freddie Mac Home Possible Mortgage helps low- and moderate-income buyers that are purchasing in low-income areas. Pay as little as three percent for a down payment with a credit score of at least 660. Borrowers with lower scores or no credit history may also be eligible.
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Is it time to make your dream of homeownership a reality? Then contact Agent inc. at 949-791-8160 or [email protected]. Let’s open your world to new possibilities together!