What You Should Know About First-Time Homebuyer Programs

A first-time homebuyer program offers you the opportunity to buy a house with a lower or no down payment and a low credit score. There are certain requirements you need to meet to qualify for any of the programs.  

To qualify for a first-time homebuyer program, you need to meet three requirements, including you haven’t purchased a home in the past three years, have a maximum household income of $120,000, and have earned a homebuyer education certificate. 

You Haven’t Owned a House in the Past Three Years 

If you recently sold your house, you won’t be able to apply for any assistance program. The government sets this precaution to ensure only those people in need get a grant. 

Income Limitation 

Let’s say the county you live in has a median income of $80,000. The cap set by the program is 150% of the median income, which means to qualify for the program, your income should be $120,000. 

Property Type 

Since you are applying for an assistance program, you will have limited purchasing choices, mostly planned unit developments, and condominiums. You might qualify for manufactured housing only if the property is built on a permanent foundation. Moreover, the house must be owner-occupied.  

Homebuyer Education Requirement 

Home-buyer assistance programs are primarily for low earners. Hence, they need to complete a course to understand the financial agreement they are getting into. Non-profit organizations or government agencies provide education. Once you have earned the certificate, you can apply for the assistance program.  

Most Common First-Time Homebuyers Assistance Programs 

Down Payment Grants 

The first thing the buyer needs to buy a house is a 20% down payment. You can apply for a down payment grant, which can also be used for closing costs. If you earn less than 80% of the median income in your county, you are eligible for this grant.  

There are limitations to this grant, such as a minimum credit score and a purchase price limit. The good news is that you can apply for multiple grants.  

Conventional 97 Mortgage 

Fannie Mae and Freddie Mac back this assistance program. You need a 3% down payment and a 620 credit score to qualify for it. Since you will be making a small down payment, you will have to pay private mortgage insurance, which will be included in the monthly payments.  

VA Loan 

This assistance program is for US military members only, including active duty and eligible family members and veterans. A VA loan doesn’t require a down payment and comes with an interest rate lower than all other assistance programs. You might have to pay a funding fee, which is usually included in the monthly payments.  

HomePath Ready Buyer 

This assistance program is offered by Fannie Mae and is for those first-time buyers interested in foreclosed homes. The buyer is required to complete an online education course, and they will receive 3% of the sale price for the closing cost to buy a foreclosed property. Under this program, options are limited, and you might have to spend a little on home repairs.  

Various other programs offer a grant for renovating your house. The government also offers Native Americans assistance to build a house on federal trust land. All you need todo is look at the program’s requirements and determine if you are eligible.