Financially speaking, buying a home for the first time can be a daunting experience. Fortunately, there are a number of grants and programs that can help first-time homebuyers and help prevent sticker shock. Here are several examples from a recent article on RISMedia.com, and we encourage you to speak to a mortgage loan officer, Realtor or other trusted professional to learn more about your options.
- FHA Loan: The Federal Housing Administration insures the mortgage, giving the lender an additional layer of protection. FHA loans typically feature a competitive interest rate, smaller downpayment requirement and lower closing costs.
- USDA Loan: The homebuyer assistance program of U.S. Department of Agriculture focuses on residences in certain designated rural areas. The USDA guarantees the loan, there may be no downpayment required and the loan payments are fixed.
- VA Loan: The U.S. Department of Veterans Affairs helps service members, veterans and surviving spouses purchase homes. The VA guarantees part of the loan, which makes it possible for lenders to offer some special features. VA loans also offer competitive interest rates and require no downpayment.
- Good Neighbor Next Door: Sponsored by HUD, this program focuses on providing housing aid for law enforcement officers, firefighters, emergency medical technicians and pre-kindergarten through 12th grade teachers. Through this program you could receive a discount of 50 percent off a home’s listed price in regions known as “revitalization areas.” As part of the program, you’ll need to commit to living in the home for 36 months.
- Fannie Mae or Freddie Mac: These are government-sponsored entities that work with local lenders to offer mortgage options that benefit low- and moderate-income families. Through Fannie Mae and Freddie Mac, lenders can offer competitive interest rates and low downpayment requirements.
- Energy Efficient Mortgage: This loan’s purpose is to help the buyer add improvements to their home that will make it more environmentally friendly. The federal government supports Energy Efficient Mortgage loans by insuring them through FHA or VA programs. Some improvements you can make include installing double-paned windows, new insulation and a modern heating and cooling system.
- Federal Housing Administration 203(k): If you want to purchase a fixer-upper, the 203(k) rehabilitation program may be a good fit. This loan, backed by the FHA, takes into consideration the value of the residence after improvements have been made and lets you borrow the funds you’ll need for the project and include them in your mortgage.
- Native American Direct Loan: This program helps Native American veterans and their spouses purchase homes on federal trust lands with the VA serving as the lender. If you’re eligible, you won’t be required to make a downpayment or pay for PMI.
- Local First-Time Homebuyer Grants and Programs: In addition to grants and programs provided by the federal government, many states and cities offer help for first-time homebuyers. Check your state or city’s official website for information on housing aid available in your area.