How to Get a First Time Home Buyer Loan that Fits Your Budget

Zreilly20 By Zreilly20, 9th Jul 2012 | Follow this author | RSS Feed | Short URL http://nut.bz/2x4zseo5/
Posted in Wikinut>Money>Mortgages

A lot of people are asking how to get a first time home buyer loan because they’re eager to take advantage of the property prices in the market. Check out the different first time home buyer loans and find out which one of them will benefit you in the long run.

First Time Home Buyer Loans 101

Researching how to get a first time home buyer loan will help you find a deal that fits perfectly with your budget and financial standing. First time home buyer loans can help buyers with minimal savings or low credit scores to secure a mortgage, however these loan programs have certain requirements and limitations. A first time home buyer loan may be a good choice for some buyers, but its terms and limitations may make it the wrong pick for some people. In this article, we’ll discuss the common types of first time home buyer loans, along with their advantages and limitations, if any.

What are the Qualifications for a First Time Home Buyer Loan?

The requirements on how to get a first time home buyer loan differs with each lender. Some lenders require a good credit score, while others will settle for low credit score, or even no credit history at all. Majority of these loan programs are specially made for people with low to moderate income and savings.

Needless to say, most of these programs won’t approve you for a high loan amount. Your property choices will most likely be limited to those on the lower end of the real estate market. Fortunately, that doesn’t mean that they’re forcing you to get a loan for a run-down house. The property has to be in excellent condition and declared safe from potential hazards, like lead based paint and mold contamination.

Aside from the spending cap, buyers are also required to live in the property they bought and use it as their primary residence.

Despite the stringent requirements, there are many benefits in getting a first time home buyer loan. Some of the benefits may include:

• Low down payment or no down payment option
• First time home buyer grants
• No PMI fees
• No appraisal fees
• Deferred payments
• Low interest rates
• Subsidized interest payments

Different Types of First time Home Buyer Loans


1. FHA Loan- This loan is ideal for those who can’t get a regular mortgage because of poor credit standing. The FHA insures the loaned amount, guaranteeing the lender that they will receive money, even if they buyer stops paying. By doing this, the FHA assumes the risk for the lender, hence allowing the lender to issue a low interest mortgage to the buyer.

How does the FHA do this? To insure their obligation to the lender, they charge a borrowers fee, which usually comes in the form of a mortgage insurance premium. If the buyer doesn’t finish paying the loan, the FHA will collect the insurance money and use it to pay the mortgage balance. Benefits of the FHA loan include low interest mortgage and in some cases, low down payment option.

2. USDA home loans- buyers interested in learning how to get a first time home buyer loan through USDA financing will be glad to know that this options doesn’t require a down payment and PMI fees. Borrowers can also get approved for as much as 102% of their house’s purchase price.

3. VA Home Loans- active or retired military veterans may qualify for a VA home loan, which doesn’t require a down payment. Aside from the no down payment benefit, VA loans are also 1% lower than market rate loans. The only disadvantage to this loan is the 1% funding fee that borrowers need to pay at the closing of the deal.
There are other loans aside from the 3 mentioned above, and all of them have their own set of terms and conditions, so don’t forget to consult a financial professional before you choose a loan. Researching different options on how to get a first time home buyer loan will help you save money on your monthly mortgage payment and closing costs. Sometimes, even the loan with the lowest interest rate isn’t always the best option, so choose wisely.

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Fha Loan, How To Get A First Time Home Buyer Loan, Mortgages, Real Estate, Usda Loan, Va Loan

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