10 First-Time Home Buyer Loans, Grants and Programs

You’ve done it! You’ve made one of the biggest decisions you will ever make in your life: buying your first home. No doubt you’re excited and anxious all at the same time. There is so much to do, but the first thing on your list is to find out what first-time home buyer incentives are available to you.


Fortunately, there are a number of grants, loans and programs for first-time homebuyers. This is because the government knows that homeowners are more stable and better able to contribute to the economy. They also know that homeownership contributes to generational wealth.


With this in mind, here are 10 great first-time homebuyer incentives that can help you buy your very first home:


1. Federal Housing Administration (FHA) Loan

The FHA will provide loans for first-time home buyers that allow them to make a smaller down payment and qualify with a lower credit score. This means if you can’t qualify for a conventionalmortgage from a traditional lender, you may qualify for an FHA loan.


With an FHA loan, you can qualify with a credit score of 580 and a down payment of 3.5%. If your down payment is 10% or more, you may be able to qualify for the loan with a credit score as low as 500. However, a down payment of less than 20% will require you to pay for the FHA mortgage insurance.


2. United State Department of Agriculture (USDA) Loan

The USDA will help finance the purchase of a home for low- and middle-income buyers who are buying a home in a USDA-eligible area. No down payment is required for the USDA loans and you don’t have to buy a farm to qualify. 


3. Veterans Affairs (VA) Loan

VA loans are available to serving members of the military, veterans, and their family. These loans do not require a down payment or mortgage insurance, but they do require a VA funding fee, which can be included in your monthly payments. In some cases, a service member can be exempt from paying this fee.


4. FHA 203(k) Loan

If you are looking to buy a home that needs renovations (aka. a fixer-upper) and you’re a first-time home buyer, you may qualify for the FHA 203(k) loan. This loan allows you to borrow the money you need for home improvements that cost between $5,000 and $35,000 and include this cost and the purchase cost in a single loan. You will need at least 3.5% down, and it is recommended you work with a contractor who understands how FHA 203(k) loans work.


5. Good Neighbor Next Door

The Good Neighbor Next Door program is provided through the U.S. Department of Housing and Urban Development (HUD). It provides help for public service first-time home buyers, including law enforcement officers, firefighters, emergency medical technicians, and teachers. The program gives buyers 50% off the cost of a home in an area designated as a “revitalization area.” If you qualify for this program, you will be required to live in your home for at least three years.


6. Fannie Mae or Freddie Mac

Fannie Mae and Freddie Mac are government-sponsored associations that establish the borrowing guidelines for conventional loans. These associations will buy loans for the secondary mortgage market (loans that are sold by the initial lender to another lender).


These loans require strong credit of at least 620 and at least 3% down. If you put down less than 20% of the value of the home, you will need to pay private mortgage insurance (PMI).


7Fannie Mae’s HomePath ReadyBuyer Program

Fannie Mae’s HomePath ReadyBuyer program is a way for first-time home buyers to buy a foreclosed home, also known as a HomePath home. To qualify, you have to take an online homebuyer education course, after which you can get up to 3% toward your closing costs when buying a HomePath home.


8. Native American Direct Loan (NADL)

The NADL is available to eligible Native American veterans and their spouses. In the case of this loan, the VA is the lender. If you qualify for this loan, you can buy, improve, or build a home on federal trust land. There is no down payment or mortgage insurance required and the closing costs are low. You will need to pay a funding fee, which can be included in your monthly loan payments.


9. Energy-Efficient Mortgage (EEM)

An EEM allows you to get a conventional mortgage or one backed by the FHA that includes the cost of energy-efficient upgrades, such as a new furnace, new insulation, or solar panels. You can add the cost of these upgrades to your mortgage without the need to make a larger down payment. It will mean larger mortgage payments, but lower energy costs can balance that out.


10. State and Municipal Grants and Programs

There are several state and municipal grants and programs that offer first-time home buyer incentives. These may include state-run loan programs, assistance with down payment and closing costs, and specialized programs for low-income buyers. For more information on first-time home buyer incentives in your region, check with your real estate agent or your local HUD-approved housing counseling agency.


Your First Home Is Within Reach

Buying your very first homecan be an overwhelming prospect, but it is a dream that is within reach. However, it is vital that you do your homework and find out which first-time home buyer incentives you qualify for, so you can get all the help available to you.


If you have questions,reach out to us today and learn more about the different financing options when buying your first home.



Looking for more Foundation tips and learnings? Return Home here.

Published 12.30.21  

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