Low Money Down First Time Home Buyer Programs
For many first time home buyers, saving enough money for a traditional 20% down payment is difficult, and in some case, impossible. That’s why you should consider looking at low money down first time home buyer programs that can offer assistance.
FHA Loan
With this type of loan, the Federal Housing Administration provides insurance on your mortgage in case you default. Because of this insurance, you can often get a loan with:
- Low interest rates
- Small down payment
- Low closing costs
To qualify for a low money down FHA loan with 3.5% down, you need to have a credit score of at least 580. If your credit score is lower, you may still qualify but with a 10% down payment.
USDA Loan
This loan focuses on homes in specified rural areas throughout the US. Like the FHA loan, this loan is insured but through the USDA. The USDA loan offers:
- No down payment
- Fixed loan payments
To qualify for the USDA loan, it is best to have a credit score of at least 640. If your score is lower, you may still qualify but will need to provide more documentation about your income and debt. There is also an income ceiling that varies from region to region.
VA Loan
The low money down VA Loan is for active military and military veterans. This loan is insured by the US Department of Veterans Affairs. The VA loan offers:
- Competitive interest rates
- No minimum credit score
- 0% down payment
- No private mortgage insurance
Good Neighbor Next Door
This low money down HUD-sponsored program isn’t a low money down program, but can reduce your home’s price by 50%. Here’s how:
- You work in law enforcement, as a fire firefighter, EMT, or teacher
- You purchase a home in a revitalization area
Your state will have Good Neighbor Next Door listings each week. If more than one person is interested in a particular home, the new owner is chosen by random lottery.
You will sign a second mortgage for the remaining 50% of the loan that will be forgiven when you’ve lived in the home for at least 36 months.
FHA Section 203(k)
The FHA Section 203(k) loan is perfect for those looking to rehab a home. This loan looks at the value of the home after repairs rather than its current value.
To qualify, a home must be:
- At least one year old
- Need at least $5,000 worth of renovations
- Fall within the FHA mortgage limit guidelines for the area
With this loan, you can borrow enough money for the mortgage on the home plus the funds needed for the rehab projects. The 203(k) loan has down payments as low as 3%.
Native American Direct Loan
This is part of the VA loan program that allows Native American vets buy homes on federal trust lands. These loans provide:
- No down payment
- No private mortgage insurance
- Low closing costs
- 30-year fixed rate mortgages
In addition to these programs, there are many local grants and programs provided by:
- Federal government
- State government
- City government
- Non-profit entities
To learn more about these local programs, please give us a call. We’d love to help you find a mortgage solution so that you can get into the home of your dreams.