First time home buyers typically have some very specific options when it comes to mortgages. However, for the first time home buyer, you’re probably brand new to real estate loan terms and may need some guidance. There are a number of loans available for first time home buyers. When considering which mortgage product is right for you, it’s important to understand what your financial needs are. While there are a number of different mortgage products available to you, the interest rates, repayment terms, and down payment requirements vary from one lender to the next. Here are some of the most popular first time home buyer mortgages to think about.
Private mortgage lender. Private mortgage lenders specialize in mortgages for first time home buyers that come with variable rate interest rates. Private mortgage lenders typically require that borrowers have decent credit, stable employment and a decent income.
Gift funds. One of the easiest first time home buyer loans is a gift fund mortgage. A gift fund mortgage is a type of line of credit. If you are going to be purchasing a home within a couple of years, a gift funds mortgage is a great option for you. A gift funds mortgage can be used for any purpose, such as making improvements to your home or even paying off high interest debt.
Home buyer grants. Home buyer grants can provide the money you need to buy your new home. There are many different types of government grant programs that first time home buyers can qualify for. In order to find out which programs are available in your area, you may want to contact your local city hall or department of Housing and Urban Development.
Direct loans from banks. These types of first time home buyer grants are almost always not advertised. The only way to find out if you qualify for one of these grants is to contact your local bank. The worst thing you can do is go online and apply for every grant available to you. Although direct loans from banks will usually qualify you for a lot of them, they may not be able to qualify you for enough of them to actually help you get your new home.
FHA loans and down payment assistance. The government offers various programs that can help first time home buyer families afford their new homes. These programs range from providing down payment assistance to help the buyer save money on their first mortgage, to providing first time home buyer grants to help finance the purchase. If you can get a loan with low down payment, you may be able to afford the mortgage you choose to get.
Federal Housing Administration (FHA) Loans and Home Ownership Program. Qualifying for some housing assistance through the FHA requires that you have a moderate to low income, and a decent credit rating. The FHA is also looking for borrowers who own a conventional, single-family residence, but are experiencing hardships due to unemployment or military deployment. To be eligible for a loan through the FHA, a home buyer or borrower must qualify for one of two types of conventional loans: a conventional loan or a VA, veteran, or FHA loan.
VA and FHA home loans. Both these types of loan programs require no or little down payment and require good credit score. Although you will pay higher interest rates for these loan programs, there are a great number of people who qualify for these loans regardless of their credit score. If you are a veteran, you can qualify for VA or FHA home loans, and it does not matter what your credit score is.