Are you considering purchasing your first home? If so, especially if you just kicked off your research, you are probably confused with the number of loan options available (conventional loans, VA loans, FHA loans). With all of these options and considerations, it may be harder for you to decide on a loan that is best suited to your needs. Like many, you may also have no idea on how to go about weighing the pros and cons of each.
If that’s your story today, welcome to the club! This blog is about understanding what a first-time homebuyer loan actually is, to see beyond the attractive deals and validate their efficacy helping you determine which one would best suit your situation needs.
What defines a first-time homebuyer loan are features such as reduced interest rates, minimum down payment requirements, limited transaction fees and in extreme cases, even the possibility to defer your first payments. In some cases, these are insured by the Federal Housing Administration for people, including displaced homemakers and single parents, who haven’t been homeowners in three years or who owned a property with a former spouse.
If you have a credit score of at least 580 – most FHA-approved lenders insist on a score of 620-640 as the minimum – your application might be considered for a loan with a down payment as low as 3.5%. Considering that low credit score, this is a win! Other factors that influence your eligibility include complete documentation of your assets and earnings and your ability to match the respective lender’s debt-to-income ratio.
Let’s break it all down and make it more understandable, shall we? When you read that the first time-homebuyer loan is about fewer restrictions, here’s what you should be thinking about:
So, we’ve made it all appealing, haven’t we? You are ready to take the plunge as have many others before – without reading about the dangers looming ahead. Yes, there are downsides to it, including the following:
Do you still think a first time home buyer program is for you? If so, get started and for no obligation, get your quote today.