3 Examples of First Time Home Loans
First time home loans is a term many home buyers have heard. First let's clear something up: there aren't really any particular loan that are reserved for buying your first home. However you will find that some mortgage loan options work better for first time home buyers. Whether it's a low down payment option or a loan to help finance renovations, a first time home loan can help buyers turn that first house into a dream home.
Again, understand that you won't find mortgage loans available only to first time buyers. With that said, let's take a look at 3 examples of first time home loans that might work to help you escape the apartment and buy your first home.
FHA Loans
Many first time home buyers end up using the FHA 203b loan backed by the federal government. FHA mortgage loans have a low down payment requirement of 3.5% and often include lower closing costs than other mortgage options. As a borrower you're also likely to see lower monthly mortgage insurance premiums on FHA loans.
Many first home buyers have thin credit due to a short credit history. FHA loans often have more forgiving credit requirements than conventional mortgages. Because of these reasons, they're a popular first time home loan.
Read more at 5 Reasons FHA Loans Work Well for First Time Home Buyers for a deeper look at this option.
USDA Rural Development
If you're looking for a mortgage that doesn't require a down payment then you've found your prize. USDA rural development allows a home buyer to borrow the full purchase price of the home. In other words, you don't need the traditional down payment other loans require. You will need some cash for the closing table for things like funding escrow, but no down payment is a benefit for most home buyers.
Imagine that you have $1,000 saved up for a down payment and find a home you absolutely love. If it's priced at $80,000 and you're looking at an FHA loan you'll need a minimum of $2,800 just for the down payment. Now the dream house is out of reach. However, if it qualifies geographically for USDA rural development, that $1,000 you saved up just may cover the closing costs. Now the house is at least a possibility with this first time home loan.
FHA 203k Renovation Loan
Buying a fixer upper used to mean you had to do all the work yourself, as you could afford the material and the time. Or you had to take out a second loan or line of credit. What if you could buy that house that needs a little work, and finance the kitchen remodel and other renovations right into the mortgage? This would help ensure the work is done well (a contractor is required) and the cost is amortized into the mortgage, saving you on the monthly cost. That's the idea behind the FHA 203k.
Since it's an FHA mortgage product, you'll need that 3.5% down payment (on the entire loan, including the renovations). However the other benefits to FHA loans exist with the FHA 203k. Add to those the fact that you can finance remodeling and renovations into the mortgage, and you can now turn a house into your dream home without having to do all the work yourself. It's a win-win for first time home loans.
Read more about the FHA 203k with these articles:
However you finance that first home, make sure you're getting a good deal with great service and a reasonable interest rate. Do you research on the bank to make sure they're ready to answer all of your questions. Education is key in today's housing market.
Learn more about all of the mortgage options available in today's housing market. Download "The Only Mortgage Loan Options Guide You Need" at the button below. The free guide digs deeper into home financing options for all home buyers.
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