4 Home Financing Options For First-time Homebuyers
If you are a first-time homebuyer and need home financing assistance, you should consider a loan backed by a federal organization. Such mortgage loans are generally more accessible compared to conventional mortgage loans. Examples of these mortgage facilities include:
An Overview of Mortgage Loan Programs
Mortgage loan programs are typically associated with commercial lenders including mortgage companies, credit unions and banks. However, these programs may be backed by a federal organization, such as the Federal Housing Administration (FHA), to make the loans more affordable for borrowers, as well as protect lenders from defaults. The common mortgage loan programs in America include:
Veteran’s Administration (VA) Loan Program
As the name implies, this is a mortgage loan program backed by the Veteran’s Administration. This program allows veterans, eligible surviving spouses, and active duty service members to access home financing products from commercial lenders. Eligible borrowers do not necessarily have to purchase private mortgage insurance or even make a down payment. However, similar to other mortgage products, it has income and credit score requirements.
FHA Loans
The FHA does not make loans. Instead, it ensures the loans made by mainstream lenders to protect them from defaults. FHA loans are particularly attractive to first-time homebuyers because of their less stringent qualification requirements. In essence, any borrower with a credit score at least 500 would be eligible for FHA home financing. In other words, this program is open even to first-time homebuyers with subprime credit scores.
United States Department (USDA) Family Housing Guaranteed Mortgage Program
Similar to the two loan programs discussed above, this loan program is backed by a federal organization called the United States Department of Agriculture. This program aims to assist low and moderate income earners purchase homes in rural areas. Like the two programs discussed above, they have credit score requirements. However, USDA loans tend to be a better deal than FHA loans. However, they generally have higher costs compared to conventional loans or VA loans.
Conclusion
If you are a first-time homebuyer with a credit score of 580 or higher and need home financing assistance, consider the four options discussed in this article.