You’ve decided to become a homeowner. Congratulations! This is the start of an exciting new chapter in the life of your family. While you’ll need to find a home that meets your needs, the importance of finding a home loan that fits you just as well cannot be understated. With all the options available to you, it might seem hard to pick. Below, we’ll outline a handful of the options you have available to you as a first-time homebuyer.
FHA loans are by far the most popular choice for first-time homebuyers, and for good reason. With FHA loans, your loan is guaranteed by the Federal Housing Administration, making this type of loan a government loan. Part of why this loan is popular with first-time homebuyers is the fact that some of the criteria and restrictions are more lenient than other loan types. FHA loans have a lower credit score minimum than many other programs and also allow for a lower down payment requirement (as low as 3.5% of the purchase price). In exchange for these favorable terms, borrowers are asked to pay mortgage insurance premiums, which protects the lender from risk. Since this makes the loan less of a risk for the lender, they are able to offer you better loan terms.
The Advantage Program
Working in conjunction with the FHA 203(b) program is a grant called The Advantage Program. This grant is offered by approved government entities and is practically available nationwide. While there are eligibility criteria to meet, if you qualify, this program would allow you to put only 1.5% down and equals 2% of the purchase price. As well, it may be combined with up to 6% seller concessions for the closing costs and there is no resale or borrower repayment restrictions.
Like the name suggests, USDA loans are loans guaranteed by the US Department of Agriculture, but don’t let the name deter you; these loans are not restricted to those only in the agriculture industry. This program is designed to benefit buyers looking for home in rural areas and holds many appealing factors for first-time buyers. Among these factors is that USDA loans do not require a down payment, allowing you to finance up to 100% of your mortgage, and you may even be able to finance the closing costs. USDA loans also allow you to buy a home with larger acreage, something that other loan types restrict. While there are income maximums limits and other restrictions, if you qualify, the USDA loan is a loan type you might want to consider.
VA Loans are guaranteed by the US Department of Veteran’s Affairs and were designed to offer long-term financing options to veterans and/or their surviving spouses. A key benefit of VA loans is the loan type allows financing for eligible veterans with no down payment or private mortgage insurance required. As inferred by the name, VA loans are only available to veterans with certain restrictions and minimums in regard to enlistment and time served, or to the surviving spouse of a veteran who died from service-related disability or while serving on active duty. If you are a first-time buyer who is a Veteran, a VA loan may be the perfect choice for you.
Other grants available from Southern Trust Mortgage
In addition to loan types and programs listed above, Southern Trust Mortgage also offers several other grants in varying amounts. For the first-time homebuyer, see if you qualify for our First-Time Homebuyer Program. This is a grant that may be used for down payments, closing costs, or principal reduction assistance. For the first-time homebuyer that is also a Veteran, there is a grant called the Veterans Purchase Product, which is closing cost assistance for the purchase of an existing home. Lastly, there is a grant available specifically for the women and men who serve our communities called the Community Partner’s Program. This grant offers the same options as the First-Time Homebuyer Program but is specifically for our neighbors that serve in law enforcement, education, or health care, and has a slightly higher cap than other programs.
As you can see, there are several options available to you as a first-time buyer, but the best way to be sure you choose the right product or program is to consult with a professional. Since 1998, the loan experts at Southern Trust Mortgage have been helping buyers, first-time or otherwise, into new homes with ease. Contact us today and let us help make home happen for you.