Authorities applications for first-time residence consumers for 2022

Get help buying a home

Buying your first home can be a challenge, especially when it comes to approving a mortgage and paying the down payment.

Luckily, Uncle Sam has government programs for first-time home buyers that can make it easier to get into your new home.

Dig deeper and learn about different loan options, government mortgage programs, down payment assistance, and other resources available to eligible buyers.

Check your eligibility to buy a home. Start here (01/17/2022)

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Can the state help me buy a house?

For many first-time homebuyers, there are some real hurdles along the way. Whether it's saving for a down payment and closing costs, qualifying for a mortgage loan, or simply navigating the home buying process.

Fortunately, there are government programs at both the federal and state levels that can help.

“For many, the biggest hurdle when trying to buy their first home is the upfront cost of a down payment. While the amount required varies by loan type, it can still be a barrier to home ownership,” said Mandie Anderson, branch manager at South Carolina-based Silverton Mortgage.

Government-backed loans are a great option for anyone who can afford a monthly payment but has less money to save or has a lower credit rating.

“The good news is that there are numerous government loan programs and down payment assistance options designed specifically for those who need a little extra help with financing. These programs can be a solution, especially for those who can afford a monthly mortgage payment but may not have a large amount of money to put down the down payment,” explains Anderson.

Government-backed loans are a great option for those with less money to invest or those with lower credit ratings, says Jeff Gravelle, chief production officer at Newrez, a national mortgage lending and services organization.

“Because they are government-insured, these loans are less risky for lenders and therefore allow lenders to offer lower interest rates. This often makes monthly mortgage payments cheaper,” he adds.

Government loans for first-time homebuyers

There are three government loan options worth exploring if you need a little extra help qualifying for a mortgage: an FHA home loan, a VA loan, or a USDA loan.

FHA Home Loans

FHA loans can be helpful if you can't afford a traditional 20% down payment or have less than perfect credit.

"With an FHA loan, you can only put down 3.5% on closing," says Anderson. "These loans have more flexible underwriting standards and are insured by the Federal Housing Administration and issued by an FHA-approved lender."

The downside is that with an FHA loan, you have to pay an upfront mortgage insurance premium along with annual premiums that are paid monthly. This mortgage insurance usually has to be paid off until you've paid off your mortgage or refinanced it into another type of loan.

Here are some other FHA loan requirements, according to Nik Shah, CEO of Home.LLC in San Francisco:

credit-worthiness: FICO score over 580Credit limit: The current FHA loan limit for most single-family homes is $420,680Lender/Assumption Fee: Approximately 1% plus subscription fee between $350 and $1,000Upfront Mortgage Insurance Fees: Typically 1.75% of the loan amount included in the loan balanceAnnual Mortgage Insurance Premium: Typically 0.85% of the loan amount divided into monthly installments

Check the eligibility of your FHA loan. Start here (01/17/2022)

FHA alternative: HomeReady and Home Possible

Note that FHA is not the only low down payment loan option available.

Fannie Mae and Freddie Mac — two "government-sponsored companies" — each offer a mortgage program at just a 3% discount. Fannie Mae's low down payment option is called HomeReady and Freddie Mac's is called Home Possible.

While not technically government mortgage loans, they offer many similar benefits, such as: B. Flexible credit rating and income guidelines. They also have reduced private mortgage insurance (PMI) premiums, which means you may pay much less mortgage insurance costs on a HomeReady or Home Possible loan than you would on an FHA loan.

These programs are definitely worth considering when considering an FHA mortgage.

Check your eligibility for a 3% loan. Start here (01/17/2022)

VA Home Loan

A VA loan is arguably the most generous federally-backed loan available, but you must be an active service member, veteran, surviving spouse, or other eligible applicant to qualify.

"What sets this loan apart from many others is that it requires no down payment and no monthly mortgage insurance," notes Anderson.

She continues, “VA loans are made by private lenders, with the Department of Veterans Affairs guaranteeing a portion of the loan. This allows the lender to offer more favorable terms and interest rates without requiring a minimum credit rating.”

However, you must pay a financing fee to get this privilege. According to Shah, here are more details on a VA loan:

Credit limit: Often limited to Fannie Mae/Freddie Mac compliant loan limits, the current limit for most areas is around $647,200Financing / takeover fee: Prepayment fee between 1.4% and 2.4% depending on the deposit and loan purpose. Usually included in the loan amountMain residence must be: You cannot use a VA loan to buy a vacation home or investment property

Check the eligibility of your VA loan. Start here (01/17/2022)

USDA Home Loans

USDA home loans are ideal for low- to middle-income borrowers looking to purchase a property in a rural area.

"This loan program is also available to low- to middle-income buyers in less-populated suburbs of some major cities," Gravelle explains. "Like a VA loan, a USDA loan allows borrowers to finance up to 100% without losing money."

Shah warns that USDA loans "can be difficult to apply for, depend entirely on your income, and come with fees."

To qualify, your household income must meet certain guidelines and the home to be purchased must be in an eligible rural area, as defined by the USDA.

Here's more fine print on the USDA loan, reports Shah:

Geographical Restrictions: The property must be located in an area designated as “rural” by the USDAIncome limits: Your household income must not exceed 115% of the median income of the area where you live Financing / takeover fee: The mortgage insurance prepayment is 1% which can be funded into your main balanceAdditional monthly fees: Approximately 0.35% of the loan balance for the remainder of the loan, paid monthly; This fee gets smaller each year as you repay more of the loan

Check your USDA loan eligibility. Start here (01/17/2022)

State Mortgage Programs

Many states have special loan programs administered by their home loan agency or similar entity. These can offer unique benefits such as low interest rates and down payment assistance (DPA).

“There are many publicly and privately funded programs available to help first-time buyers, such as B. Treasuries and DPA programs,” Gravelle continues. “These homebuyer programs offer funds administered by cities, counties, housing finance agencies, nonprofits, lenders, and other groups; in some high-price areas, even employers offer them.”

Because these programs are usually localized to a specific area, the best way to learn more is to speak to a local loan officer or real estate agent, or search online for "first-time homebuyer programs" or "down payment assistance programs." in your city or county.

"Keep in mind that not everyone qualifies for these state programs," Anderson says. "Factors like income, credit score, occupation, and even where you choose to shop can determine your eligibility."

Check out these links for more information and to find a government mortgage or assistance program near you:

Down Payment Assistance (DPA) for first-time homebuyers

There are thousands of DPA programs nationally and locally. The help they offer comes in a variety of forms, including grants, loans, and credit.

As Anderson explains:

“With a DPA grant, the borrower receives money that does not have to be repaid on the condition that they own the home and live in it for a specified period of time. This is usually secured by a lien on the property until the conditions are met. “Alternatively, the DPA program may be a second mortgage loan offered at a low or no interest rate that must be repaid or forgiven over a period of time. This will most likely also be secured by a lien on your property.”

Alternatively, certain agencies in certain states issue Mortgage Credit Certificates (MCCs). These can reduce the amount of federal income tax you pay, allowing you to save more funds on a down payment and other expenses associated with a home purchase.

“Remember that a tax credit is not received until you file a tax return. Therefore, consult a tax professional for your specific situation,” adds Anderson.

Check out these links to find DPA programs:

“When looking for financial assistance programs, carefully review the program requirements to ensure you qualify. Also, make sure you find an approved lender,” advises Anderson.

Other government resources for first-time homebuyers

First-time homebuyers often find it helpful to take a homebuyer education course before making the purchase. And if you use a state mortgage or down payment assistance program, homebuyer training is often required.

“You can find a lot of courses online or through government housing agencies like Freddie Mac and Fannie Mae. Some are free, while others are available for a fee that typically ranges from $75 to $100,” says Gravelle.

Although you don't have to take this course, it's worth your time and expense.

"Home ownership is an important responsibility, and better understanding will lead to greater success," says Anderson.

You can even qualify for a free consultation from HUD.

"Every state has HUD-approved housing agencies that can help borrowers navigate the process for free," adds Anderson.

Explore your home buying options

If you are serious about buying a home, it pays to get in touch with a mortgage lender. Your loan officer can help you explore your options, engage with assistance programs, and assess your eligibility.

Not only does this give you direction, but pre-approval is often required to make an offer on a home.

So when you're ready, your first step should be to contact a mortgage lender and talk to them about your options.

Confirm your new plan (January 17, 2022)

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