Buying a first home is a rite of passage. After crunching the numbers, receiving preapproval for a mortgage and finding a trustworthy agent, you’re ready to go house hunting. To make the adventure less daunting, check out these programs to help accomplish your goal of homeownership.
The Federal Housing Administration (FHA for short) is a government agency that will assist first-time buyers with low credit scores and other financial challenges. Homes can be purchased with as little as 3.5 percent down instead of the customary 15 percent to 20 percent. This type of loan requires a monthly mortgage insurance premium, protecting the lender against default. The FHA also offers hardship relief programs for those struggling with existing mortgages. All home appraisals must be done using an FHA-approved appraiser.
Veterans interested in purchasing a home should contact the U.S. Department of Veterans Affairs. This applies to military spouses as well. Veterans Affairs (VA for short) will guarantee part of a loan, and may not require a down payment or minimum credit score. In addition, the VA will also negotiate with a lender if you are unable to make timely payments. Unlike an FHA loan, mortgage insurance is not required because the VA insures against the lender’s loss in case of default. The property must be owner-occupied. Loan limits vary by region.
The U.S. Department of Agriculture offers farm loans with interest rates below 3 percent through the Farm Service Agency. The loans are intended to help people start, maintain or strengthen a farm or ranch. A minimum credit score is not required but loan limitations and other guidelines must be followed.
Special Programs for First Home Buyers
Many other loan assistance programs exist, depending on your background, interests or career choice. The Energy Efficient Mortgage helps those interested in the purchase of homes outfitted with energy-saving features, and the Native American Direct Loan helps veterans of Native American descent. If you are a teacher, doctor, police officer or firefighter or you work in the non-profit segment, the Hometown Heroes program is another way to get help. The service is free and first-time buyers often save thousands on the purchase of a home.