Government Loans for First-Time Home Buyers

Owning a home offers plenty of advantages, including the chance to build wealth over time as you amass equity and the opportunity to exercise greater control over your living space. However, individual homeowners aren’t the only ones to benefit. There are also pluses for society as a whole. As HouseLogic points out, encouraging homeownership provides social benefits by strengthening communities and economic benefits by protecting property values. To support homeownership and the positive impacts it can deliver, the government strives to make the dream of owning a home more attainable for Americans. Government loans for first-time home buyers are designed to aid Americans who are eager to own a home for the very first time.

Government Loans for First-Time Home Buyers

Whether they’re aimed specifically at first-time buyers or open to a wider pool of potential purchasers, many government loan programs come with relaxed credit standards that make it easier for aspiring borrowers to qualify. As an added bonus, they generally require little or no down payment.

It’s also worth noting that you don’t actually have to be working toward buying your first home to be considered a first-time buyer. As The Balance indicates, many government loan programs define a first-time buyer as anyone who has not owned a house in three years.

If you’re exploring mortgages as a first-time buyer, you may wish to consider the following government loan programs:

FHA Loans

FHA loans are amongst the most popular government loans for first-time home buyers. Originated by FHA-approved lenders and insured by the Federal Housing Administration, these home loans are a great choice for both first-timers and other borrowers with low-to-moderate incomes. If you qualify and have a credit score of at least 580, you can borrow up to 96.5 percent of the property’s value. That means that you’ll need a down payment of just 3.5 percent. What if your credit score is a bit lower? You’ll need a bit more of a down payment, but you may still be able to get an FHA loan. If your credit score falls between 500 and 579, then you can borrow up to 90 percent of the property’s value, which means a 10 percent down payment is all that’s required. Struggling to put together the down payment? With an FHA loan, you can draw all or part of your down payment from your savings, accept a monetary gift from family members, or use a grant program.

USDA Loans

Some people consider USDA loans one of the mortgage industry’s best-kept secrets, and they’re a great choice for people taking their first plunge into homeownership. Do you have little or nothing set aside for a down payment? Guaranteed home loans issued as part of the U.S. Department of Agriculture’s mortgage program require no down payment, and because the USDA offers the lenders who extend these loans a 90 percent guarantee that significantly reduces their risk, you’ll enjoy a low interest rate.

How can you qualify for a USDA loan? You must meet certain income criteria, show a willingness to meet your financial obligations, and purchase an appropriate home that is located in an eligible area to use as your primary residence. While the program is run by the USDA, it isn’t limited to agricultural communities. Although urban properties are generally excluded, many suburban and rural properties are eligible.

VA Loans

If you are embarking on a search for your first home and are currently or have previously served in the military, we encourage you to explore the possibilities offered by VA loans. A benefit earned through service, VA loans are issued by private lenders and backed by the U.S. Department of Veterans Affairs. Thanks to the VA’s backing, eligible borrowers shopping for a home to serve as their primary residence can secure a home loan with a competitive interest rate and favorable terms. For example, no down payment is necessary as long as the sales price is equal to or less than the home’s appraised value. Plus, there’s no requirement for private mortgage insurance, prepayment penalty fees are forbidden, and closing costs are limited.

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When you’re ready to discover more about government loans for first-time home buyers, reach out to PrimeLending of Kansas City. We work hard to provide personal attention, solid expertise, and smart home financing options with flexible features so that you can build you future on a stable foundation. We offer several home loan programs for first-timers, including FHA loans, USDA loans, and VA loans. Our friendly team of loan professionals will be delighted to assist you as you explore the possibilities. Let us help you find a smart solution that will help you fulfill your housing dreams. Contact us today to schedule a consultation.