First Time Home Buyer Programs You Should Know About!

Crossing over from a renter to owner is a big step. But there are a variety of mortgage options designed to make this process easier for first-time buyers.  Learn about down payment assistance, WSHFC, and grants are examples of first time home buyer programs. Low down payment requirements or flexibility with credit scores, special loan programs are often the key to home ownership for new buyers. Although the paperwork can be seem to make the home buying process hard, finding financing for low- to-moderate, even high-earning, borrowers isn’t quite that complicated. Here are the programs first-time borrowers should know about when shopping for a new home.

Low Down Payment Loan Options

As a first time home buyer you may have heard that you need a large down payment to buy a home. It’s simply not true. In fact, many people purchase a home with much less than you would think is required. According to the National Association of Realtors®, the median down payment among first-time buyers has been 6% since 2014.

There are certainly reasons to make a 20% down payment if you can afford it – like getting a lower mortgage rate and avoiding private mortgage insurance (PMI) that come with low down payment options – but it can take years to accumulate enough savings. It can be shocking on how long it takes to save that amount of money. If you decide to wait a few years to afford a 20% down payment that may come with consequences like, rising rents, higher home prices and mortgage rates. These alone could keep pushing the dream of home ownership further out of reach. Luckily, there are a variety of low down payment loan options available.

Down payment Assistance

Qualifying as a first-time home buyer doesn’t mean you’ve never owned a house. Meeting first time home buyer programs qualifications unlocks many benefits. This includes low- or no-down-payment loans, down payment assistance, grants and more.

And those perks can be worth a lot of money.

Washington State Housing Finance Commission’s (WSHFC) down payment assistance provides additional options for families that qualify. These programs can aid by giving favorable terms for down payment assistance. Interest rates, grants and reduced Private Mortgage Insurance (PMI) costs. The WSHFC has helped thousands of families for over 35 years become successful home owners. This program extends to Conventional, FHA, VA and USDA loan programs.
Our accredited classes provide you with the certificate you need for down payment assistance if you qualify. Register for one of our classes and arm yourself with the knowledge about the loan programs and the process of buying a home by clicking here.

Conventional Loans with Private Mortgage Insurance

Another mortgage option designed to make this process easier for first-time buyers is a conventional loan backed by private mortgage insurance. Buyers can purchase a home with a down payment as low as 3%. Many lenders will not discuss your PMI options, FHA vs Conventional and down payment assistance. Hear all the facts at one of our classes so you understand what your options are. Taking a loan with PMI is not a bad thing – you can cancel it when your mortgage balance reaches 78% of the home’s original value. Some lenders will even allow cancellation with an 80% balance. Private mortgage insurance premiums may also be tax deductible.
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FHA Insured Loans

With an FHA, insured loan, buyers can purchase a home with a down payment as low as 3.5% through a government program backed by taxpayer’s dollars. The program offers only one payment option – an upfront fee due at closing and a monthly fee. It’s important to note that the FHA does not allow buyers to cancel the premium payments, meaning a buyer must make the payments for the life of the loan. FHA premiums may also be tax deductible.

How are private mortgage insurance and FHA different?

Private mortgage insurance is the private sector alternative to FHA, which is a government program backed by taxpayers. Another key difference is with cancellation. Some forms of private mortgage insurance may be cancelled when a loan reaches 78% loan-to-value. Unlike FHA that may be paid for the entire loan term. And while both base the cost of their insurance premiums on a variety of factors, including your credit profile and other characteristics, their premiums are different. So it’s important to compare the cost of both options to see which makes the most sense for you.

HomeReady® and Home Possible®

Fannie Mae’s HomeReady and Freddie Mac’s HomePossible are two popular programs that offer low down payment loans for qualifying low to moderate income home buyers. Both are backed by private mortgage insurance, which means buyers can put as little as 3% down. Another benefit of a HomeReady or HomePossible mortgage is they have lower MI premiums than a traditional loan. Plus, unlike FHA, they don’t require upfront fees, and MI premiums may be cancelled.

Loans for Veterans

VA loans provide a benefit by offering a long-term financing option to American veterans. These programs are government insured loans and offer various down payment options. To find out more about VA loans and whether you are eligible, go to the US Department of Veterans Affairs website or speak to a loan professional.

Get the facts about all the programs available to you by attending one of our classes.  Sign up now at a time and place that is convenient for you.