Financing Your Home for First Time Homebuyers
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Homeownership is a great financial choice in most situations, and because the current real estate market is strongly favoring buyers, now is a great time to consider purchasing your first home. While many banks have imposed increasingly stringent standards on their home loan programs, there are government programs which can help first time homebuyers make their dreams of homeownership come true. Both the USDA and the Colorado FHA home loan programs can be wonderful choices, whether you have a good credit history or a shaky one, and whether you’ve managed to save up a large down payment or if you’ve only accumulated a few thousand dollars.
The USDA loan program is administered through the US Department of Agriculture and is aimed at low income buyers. Buyers must earn 80% of the median income for their particular area, and closing costs for the loan are allowed to come from other sources, such as gifts to the buyer. One distinct advantage of the USDA loan program is that there is no monthly mortgage insurance for any loan on the program which can save buyers several hundred dollars a month alone. USDA mortgages permit 100% financing, and property improvements can be financed at 102% and completion is permitted after closing.
Virginia FHA loans, meanwhile, are often the first thought of many first time homebuyers looking for a government backed loan program. Backed by the Federal Housing Administration, FHA loans offer competitive rates with less stringent credit terms than traditional programs. Even buyers with less than stellar credit ratings can qualify for the program, and even those with prior bankruptcies can receive an FHA loan, providing that their credit has been excellent since the discharge. FHA loans allow closing costs to be rolled into the loan which can save buyers at least $6,000 in upfront costs, and also permit a down payment of 3% instead of the traditional 20% required by most home loan programs.
As an added incentive, keep in mind that if you are a deployed service member and a potential first time home buyer, you can still qualify for the tax credit for first time homebuyers. For more information on the tax credit or government backed home loans, speak with your lender or visit www.usda.gov and www.fha.gov for basic information.
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2 Responses to “Financing Your Home for First Time Homebuyers”
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Some cities are offering down payment assistance like St. Charles, MO – people can check out what their local cities are offering.
I think most people would agree that FHA loans offer competitive rates with less stringent credit terms than traditional programs. Even buyers with less than stellar credit are still able to qualify for the program.