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First Time Home Buyer Loan Programs

Learn all about what mortgage programs and assistance exists for first time home buyers
Best First Time Home Buyer Programs - Down Payment Assistance - Low Interest Rates

First Time Home Buyer Loans

Buying a home is an exciting and emotional experience. Having the right financing in place will make the process go smoothly and without interruption. We have an abundance of home purchase loan programs, and we will help you identify the very best option according to your situation. Our goal is to make your home buying experience as pleasant and efficient as possible. We have home mortgage programs that can be processed in as little as 10 days!

Home Loan Programs for First Time Home Buyers:

We have several special programs for first time home buyers. Depending on your situation, and what your needs are, we will recommend what is the most fitting and beneficial home loan for you. Our home purchase financing includes everything from low down payment programs to 100% financing for those who qualify. We encourage you to take the time to speak with one of our home loan specialists who will be able to answer all of your questions, and provide you with recommendations for what would be the best home mortgage for you.

The above 5 loan types are the primary loan program options that exist.  Other than much less common programs such as reverse mortgages (for seniors), and hard money loans (we do not offer these), the above 5 are your only first time home buyer loan options.

First Time Buyer Application

It is easy to get a quote for your first home loan!

Below you can read about each of the 5 first time home buyer programs available to learn about the requirements, who each type of loan is best for, and advantages of each mortgage type.  We are here to help you and answer any questions that you may have.  If you would like to request a free consultation, please do so.  We would love to hear from you.

 

FHA Loans for First Time Home Buyers

FHA loans are highly recommended for first time home buyers due to the relatively easy requirements to get approved and the low down payment option. The requirements to qualify for a FHA loan are:

  • Down Payment – FHA loans require a 3.5% down payment.
  • Credit Score – 620 credit score or higher (some other FHA lenders might allow a 580).
  • Pay Stubs – When you apply, you must submit your two most recent pay stubs.
  • Tax Returns – You must also provide two years of tax returns.  2 years of consistent employment is required.
  • DTI Ratio – Your mortgage payment must not exceed 31% of your monthly income.  Also, your total debts, which includes auto loans, credit cards, and other debts which show on your credit report and require monthly payments, must not combined exceed 43% of your income.  If your debt-to-income ratio exceeds these amounts, you may still qualify with “compensating factors”.
  • Mortgage Insurance – All FHA loans require upfront mortgage insurance and monthly insurance premiums (MIP).  You can use our FHA mortgage calculator with MIP to see how much mortgage insurance costs based upon your desired loan amount.  It will also calculate inputted taxes and homeowners insurance so you can see the total expected payment amount.
  • No Bankruptcies – If you have had a bankruptcy in the last 3 years you will be disqualified for FHA financing, unless the bankruptcy was due to what is called an “extenuating circumstance” such as job loss or medical emergencies.  The program you may be eligible for if you are within 3 years of a bankruptcy, but it was due to an extenuating circumstance is the “FHA back to work program”.
  • No Foreclosures –  If you have had a foreclosure in the last 3 years you will be disqualified for FHA financing, unless the foreclosure was due to what is called an “extenuating circumstance” such as job loss or medical emergencies. The program you may be eligible for if you are within 3 years of a bankruptcy, but it was due to an extenuating circumstance is the “FHA back to work program”.

Who is a FHA loan right for?

FHA loans are best for those with fair or good credit, but not necessarily excellent credit.  They are also great for those seeking a low down payment, or to work with a down payment assistance program.  Other applicants who an FHA loan will be the right fit for are unmarried couples, or other types of non-married co-applicants who want to buy a home together.  Many individuals or co-applicants who can not qualify for other types of home loans, will qualify for FHA.

What are some other advantages of a FHA loan?
Aside from the benefits of less strict qualification guidelines and low down payments, they offer other benefits.  This includes that FHA loans are assumable, meaning you can transfer the loan to a qualifying other party.  Another great aspect of FHA loans is the refinancing options.  Once you are in an FHA insured loan, you find refinancing to be a quick and easy process. FHA provides qualifying borrowers with a streamline process for refinancing. The FHA streamline refinance program only requires a small amount of documentation in order to close, and does not require an appraisal (your previous appraisal will be valid to use again on your streamline refinance).  Another advantage FHA loans offer is the highest LTVs on cash out refinances.

To learn more about USDA loans, visit this page.

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Conventional Loans for First Time Home Buyers

Conventional loans are recommended for borrowers who can place a large down payment down on a home, and who have good-to-excellent credit history.  If you have the financial means to place 20% or more down then you certainly will want to evaluate the advantages of a conventional loan for your home purchase.  The primary benefit is that you will not have to pay PMI (private mortgage insurance) which is only required on loans that have an LTV greater than 80%.  This can save you a lot of money.  FHA loans require MIP (monthly insurance premiums) for all loans, which can be costly.  When you speak with a loan representative they will be able to answer all of your questions about what loan program suits you best.

  • Minimum of 3% down payment.
  • 620 credit score or higher to qualify.
  • No bankruptcies within the last 2 years.
  • No foreclosures within the last 3 years.
  • Maximum debt-to-income ratio of 45%.
  • 2 months pay stubs.
  • 2 months bank statements.
  • 2 years tax returns.
  • Mortgage insurance (for loans over 80% LTV).

Who is a conventional loan right for?
Conventional loans are best for those who have excellent credit, and also for those who are able to place a large down payment on the home purchase.  This is especially the case if you are able to put 20% or more down, since this will allow you to avoid paying mortgage insurance.  However, conventional loans can still the better choice for certain borrowers with who would like to put a small down payment.  There are options for a 5% and even 3% down (the “conventional 97 loan”).

What are some advantages of conventional mortgages?
Some other advantages of conventional loans is that you can purchase investment properties.  Other loan types do not allow second homes or rental properties, but conventional mortgages do.  There is also a wide range of options related to the repayment schedules (30 year, 15 year, etc.) and other loan terms such as more options for both fixed and adjustable rates.

To learn more about conventional loans, visit this page.

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USDA Loans for First Time Home Buyers

Considering buying a home in a rural area?  The United States Department of Agriculture (USDA) offers favorable financing terms to qualifying borrowers.  This includes 100% financing (no money down), as well as other incentives to Americans in the market to purchase a rural or agricultural property. This program is called the USDA rural development loan, or the USDA guaranteed loan.

  • 620 credit score or higher.
  • No bankruptcies in last 3 years.
  • No foreclosures in last 3 years.
  • You must be a US citizen.
  • 2 years verifiable employment history.
  • 2 months bank statements and 2 years tax returns.
  • Income limited to 115% of the median average income for your area (we can help you determine what this is).
  • There are strict property requirements, such as only homes in certain rural or suburban areas.

Who is a USDA loan right for?
USDA loans are for those with low and moderate income who want to buy a rural home.  Only designated areas outside of cities are eligible for USDA financing. This includes rural zones, small towns, and many areas just outside of major cities.

What are advantages of the USDA rural development loan?
The major advantages of USDA loans is that they provide an incredible opportunity to a segment of the market that has been underserved. Rural communities, especially low income families, can buy a home backed by the US government, and with excellent loan terms.  This includes no down payment, low mortgage insurance costs, and low income can qualify.

To learn more about USDA loans, visit this page.

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VA Loans for First Time Home Buyers

If you are an active duty military member or retired veteran, we recommend that you pursue a VA loan.  The Veterans Administration provides qualifying military members and veterans with the best home loan terms in the nation.  In most other scenarios, we would recommend FHA loans for first time buyers, but the Veterans Administration provides the very best mortgages to veterans. You may qualify for 100% financing and special low cost and low rate loans. We will help assist you in figuring out what you qualify for.

  • Time Served in Military – the first and foremost qualification for a VA is to have served at least 181 days on active duty, 90 days wartime, or 6 years in Reserves or National Guard.  A Certificate of Eligibility is required (we can assist you in explaining how to receive yours if you would like our help).
  • Credit Requirements – 620 credit score or higher at a minimum.  Other VA lenders might be able to help you with a lower score than a 620 mid score, but that is our minimum credit score requirement.
  • Employment Requirements – 2 years of work history is required for VA loans.  This can include changes to your job, but consistency of employment is important.
  • Documentation – Once you apply you will receive an approval (if you qualify), which will outline what documentation is needed.  This usually consists of pat stubs to verify employment, bank statements, and tax returns.  This is in addition to the COE.
  • No Bankruptcies or foreclosures – 3 years minimum out of bankruptcy or foreclosure.

Who is a VA loan right for?
Active duty members of the military and retired veterans, as well as qualifying spouses.

What are some other advantages of a VA loan?
The most significant advantages of VA loans are that you may qualify for 100% financing which means no down payment.  The mortgage insurance costs are also lower on VA loans.  Another notable benefit is that on future refinances you might be able to cash out up to 100% of the property value.

To learn more about VA loans, visit this page.

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Jumbo Loans for First Time Home Buyers

Most first time home buyers purchase a home that is well within the limits of a conforming or FHA loan. However, some are fortunate enough to be able to afford a more expensive home. For the buyer who needs to purchase a home above the conforming loan limits or FHA loan limits allow, we have jumbo financing. This includes loans up to $2,000,000. It is important to mention that most jumbo loan products require a higher down payment, and assistance is certainly not available for these types of homes.

Jumbo Loan Requirements:

  • 640 credit score.
  • 25% down payment.
  • No bankruptcies in last 2 years.
  • No foreclosures in last 2 years.
  • 2 years tax returns.
  • 2 most recent bank statements.
  • Proof of assets.

Who is a jumbo loan best for?
Someone who wants to purchase a home above the conforming or FHA loan limits.  There are what are known as “high cost areas” that allow for higher loan limits, but for most of the country the conforming limits are $417,000 and most counties have FHA loan limits of $271,050.

What are the advantages of a jumbo loan?
The main advantage of a jumbo loan is that it provide financing for homes that do not meet the conforming or FHA loan limits. These maximum loan amount limitations are set at the county level. Any loan that exceeds these amounts is considered non-conforming and requires a jumbo mortgage. If it were not for jumbo financing, there would not be an opportunity to purchase a home that exceeds the loan limits. For conforming loans, the maximum loan amount is usually $417,000 except in high cost areas. For FHA loans, the limits for much of the country are $271,050, but go as high as $629,500 in high cost areas (such as in California, Hawaii, and certain counties in many states that have higher cost homes.

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Home Loan Programs Available In:

Alabama, Arkansas, Arizona, California, Colorado, Florida, Georgia, Kansas, Louisiana, Iowa, Illinois, Indiana, Maryland, Michigan, Minnesota, Missouri, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, Ohio, Oregon, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, Wisconsin, and Wyoming.