The Financial Assistance Guide for First-Time Home Buyers

How to Afford Your First House Now

If you’re on a home buying journey for the first time, the process can sometimes feel like a full-time job. There are so many terms to learn, mortgages to choose from, and budgets to consider. On top of that, there’s also the challenge of coming up with the upfront cash for the down payment and closing costs of the house. These demands can really discourage first-time home buyers, making it seem like a home is out of reach. The good news is that we did the heavy research and found out there are solutions to overcoming these hurdles. This means you have options — sigh of relief — and despite what you’ve been told, you’re not stuck in an apartment for eternity. Luckily, first-time home buyers are eligible for financial assistance programs that make ownership within reach.

Today’s first-time home buyers have more than 2,000 financial assistance programs to choose from. Some programs function regionally and are only offered through the state you reside in, while some financing is available nationwide. There are many reasons first-time home buyers turn to financial programs for help. Loans, grant programs, down payment assistance* and other monetary incentives increase the chances of owning a home for candidates with modest incomes or weak credit. Usually, these programs are offered in combination with a mortgage you select.

Every program is different, catering to certain demographics and personal financial statuses. There are loans for those with less than perfect credit, there’s loans specifically for veterans, and there’s even discounts for certain professions like educators and first responders. There are many options out there for first-time home buyers! Regardless of your background, you’ll certainly be able to find one that works for you.

The first step is to read up on the programs currently available, which we outlined below. Eligibility is determined mainly by your income, your credit history and the location of the home you want to buy.

What are the main benefits of First-Time Home Buyer Financial Assistance Programs?

  • Standout in a competitive market with down payment assistance!
  • Smaller loan means you owe less!
  • Lower interest and reduced mortgage payments!
  • Leave your apartment and buy a home sooner!

Types of Assistance for First-Time Home Buyers

  • First-Time Home Buyer Grants: Consider this a gift of free money. Homeowners never have to repay this amount. These are often times applied to closing costs or down payments.
  • Deferred-Payment Loans: Postpone your interest payment for 3+ years. Loan doesn’t need to be paid unless you move, sell or refinance within 3 years.
  • Low-interest Loans: Affordable financing with low-interest mortgages for low to modest income earners

Popular First-Time Home Buyer Financial Assistance Programs and Loan Requirements

  1. FHA loanLink opens in a new tab: Insured by the Federal Housing Administration and approved by a lender or bank. A common mortgage loan program for borrowers with low to moderate income and weaker credit. Low down payment and low closing cost. Pay as little as 3.5% down. Insurance premiums are required.
  2. VA loanLink opens in a new tab: Part of the Department of Veterans Affairs home loan. Qualified candidates with a military connection pay as little as $0 for the down payment, receive low rates, and don’t have to pay insurance premiums.
  3. USDA loanLink opens in a new tab: US Department of Agriculture offers financial support for those in rural economies. Qualified individuals or families receive low interest, fixed rate terms, and $0 down payment.
  4. Fannie Mae and Freddie MacLink opens in a new tab: Federally backed home mortgage companies created by congress that provide stability and affordability to the mortgage market with just 3% down.
  5. Good Neighbor Next DoorLink opens in a new tab: Funded by the US department of Housing and Urban Development. Available for law enforcement officers, teachers (pre-Kindergarten through 12th grade) firefighters and emergency medical technicians. Eligible candidates located in a revitalized area, receive major discounts on the home’s listed price (up to 50%).
  6. State Housing Finance Agency (HFA) ProgramsLink opens in a new tab: This list includes financial programs by state for residents. Increase chances of owning homes with down payment assistance, loans, grants and other deals.

To find out more about loan program requirements, qualification criteria and receive personalized guidance on all thing’s financial assistance, contact a PrimeLending home loan expertLink opens in a new tab. Still wondering if owning is the right choice for you? Check out our renting vs. owning section for more information.

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