Types of Mortgage Loans for First Time Home Buyers
Many people rent a home without even considering the option to buy because they assume they can’t qualify for a loan or won’t be able to afford the monthly mortgage payments. Did you know that often times the amount you’d pay in a mortgage payment can be less or equal to what you are paying in rent? Another major deterrent is not having the money for a down payment. The thought of needing 20% down to qualify for a loan sounds daunting and if you haven’t been saving for this, it’s unlikely that most first time home buyers have that cash on hand.Don’t be discouraged! There are still options for YOU to buy your first home! There are a number of loans specifically designed for, and offered to, first time homebuyers that require a low, or sometimes no, down payment.
If you have not-so-great credit, FHA Loans might be a good option for you. The Federal Housing Administration guarantees a portion of these loans which frees lenders so that they can loosen their standards for acceptance. You can get these loans with sometimes as low as a 3.5% down payment.
VA loans are available for service members and veterans as well as their surviving spouses. If you are a Florida borrower with your full VA loan entitlement, you are able to borrow as much as a lender is willing to lend without a down payment. Veterans without their full VA loan entitlement are bound by Florida VA loan limits. Either way, this is a strong option.
USDA loans are offered by the United States Department of Agriculture and great if you are looking to buy in rural or low income areas. These loans offer up to 100% financing (no money down), lenient eligibility requirements and competitive interest rates as the loans are guaranteed by the USDA.
Some states have first time homebuyer programs such as the Florida’s Bond Programs; i.e. Florida Assist, 3% HFA Preferred Grant, Florida Military Heroes and the SHIP (State Housing Initiatives Partnership) loans. All of these loans provide various down payment assistance for first time home buyers.
The first step is to contact a mortgage broker to learn more about these programs and find out which loan might suit you. Once your eligibility is determined, the next step will be to find out what amount you qualify for and then hopefully… start the search for your dream home!
