9 Loan Programs for First-Time Home Buyers

Saving for the down payment is one of the biggest hurdles for first-time home buyers. But with the help of low down payment loan programs and down payment assistance, you can be home sweet home in no time.

1. FHA Loan

FHA Loans are one of the most popular mortgages for first-time buyers due to their lenient credit score requirements and low down payment options. While Conventional Loans typically require a credit score of 620 or higher, FHA Loans sometimes accept credit scores as low as 580. FHA Loans also allow for down payments as low as 3.5%*. Due to their more lenient requirements, FHA Loans can be easier to qualify for than Conventional Loans.

2. USDA Loan

USDA Loans are a great mortgage option for home buyers looking to build, renovate, or purchase a home in select rural or suburban areas. It is one of two mortgage products that offers a 0% down payment.

3. VA Loan

The VA Loan is the other 0% down payment mortgage option. It is available for all active-duty military, Veterans, reservists, National Guard, and surviving military spouses. In addition to its down payment benefit, the VA Loan requires no mortgage insurance, has flexible underwriting requirements, and often offers a lower-than-average interest-rate.

4. FHA 203(k)

FHA 203(k) loans are a good option for home buyers looking to buy a fixer upper. Purchasing a fixer upper can help you break into homeownership when home prices are high, or home buyer competition is hot. With a 203(k) Loan, you can roll the costs of a mortgage and home improvement projects into one loan. This way, you are spending much less on interest for home improvement projects than simply charging your credit card or taking out a personal loan.

5. Fannie Mae HomeReady and Freddie Mac HomePossible

Both Fannie Mae HomeReady and Freddie Mac HomePossible offer eligible buyers down payments as low as 3%**. They also have cancellable mortgage insurance, low-cost refinance options, and include a home buyer education course.

6. Good Neighbor Next Door

The Good Neighbor Next Door program provides financial assistance for law enforcement officers, firefighters, emergency medical technicians, and teachers. Through Good Neighbor Next Door, eligible home buyers can receive a 50% discount on their home purchase.

7. Chenoa Fund

Financing a down payment can still be difficult even when it’s as low as 3% - 3.5%**. For a $350,000 home, this would still mean a down payment of over $10,000. The Chenoa Fund helps home buyers cover up to 5% of their down payment costs. Used with the FHA Loan, Fannie Mae HomeReady, or Fannie Mae’s 97% Standard Loan, Chenoa Fund assistance can help cover some or all of your down payment.

8. Freddie Mac BorrowSmart^SM Program

Freddie Mac BorrowSmart^SM Program offers eligible home buyers up to $2,500 toward their down payment or closing costs.

9. HomeFundIt™

HomeFundIt™ is a down payment gifting platform that lets you raise down payment gifts from family and friends through your own personalized campaign. With HomeFundIt™, your contributors can easily gift money online with their credit or debit cards. 

For more information on our different loan products, head to our “Loan Product” page. If you would like to explore your down payment options or see which programs you might qualify for, contact us!

 

Sources: Bankrate

 

*FHA Payment example: If you bought a $250,000 home with a down payment of 3.5%, for a loan amount of $241,250, on a 30 year loan at a fixed rate of 3.3% (3.5% APR), and a $157/month private mortgage insurance payment, you would make 360 monthly payments of $1,240.00. Payment stated does not include taxes and insurance, which will result in a higher payment.

**Conventional Payment example: If you bought a $350,000 home and put 3% down, for a loan amount of  $339,500, with a 30 year loan at a fixed rate of 3.3% (APR 3.5%), you would make 360 payments of $1,525.00. Payment stated does not include taxes and insurance, which will result in a higher payment.