How First-Time Home Buyer Loans Work

Buying your first home is a big deal, with a lot of financial aspects to consider. Especially if you’re unfamiliar with loans and real estate jargon, the process can feel daunting and overwhelming.

Getting a good loan is an important step in the process, as first-time buyers are often just getting on their feet financially. A loan can make for easier approval and down payment assistance, and put you in a good position to focus on your other finances.

So, what is a first-time home buyer loan anyway?

A first-time homebuyer loan is designed to help people become homeowners. So if you feel lost, don’t fret! The loans are typically targeted in specific geographic areas, and the programs can vary depending on where you live and what’s available to you. These loans are built to provide assistance to qualified buyers (aka, people with a good credit score). These benefits can come in the forms of down payments, loan forgiveness, interest cost, etc.

Where can I find these loan programs?

Unfortunately, searching for good loan programs can be a lengthy process. To start, try going to the U.S Department of Housing and Urban Development and looking at homebuying programs. Or simply do a Google search, and be sure to include your location. Also consider including characteristics in your personal life that could benefit your search. For example, maybe you’re a teacher, veteran, or disabled. There may be additional programs specific to those realms!

Who qualifies for first-time home buyer loans?

As the title states, these programs are specifically for those who have never owned a home. There are typically financial restrictions to meet; so these loans are reserved for those with low or moderate incomes. Most programs put a cap on the property you’re buying, so don’t go out expecting to buy the most expensive homes in your area! The home you buy has to meet physical requirements, but it’s nothing extensive. It just has to be in good condition and free of safety hazards. If you’re considering getting a home but aren’t sure if you can because it’s in bad shape, you can also try going with a FHA 203k rehabilitation loan. That way you can purchase the home and fund improvements all in one loan.

Are there downsides to first-time home buyer loans? What are my other options?

These loans are typically pretty straight forward with little drawbacks. Although in some cases, they may present challenges. Some of these might include price restrictions, loss of benefits from selling too soon, limited fixed-rate options, etc.

If you feel limited by these challenges, you may want to consider going with a plain jane mortgage. If you have a credit score above 720, you might not be able to get the loan anyway. The best thing you can do is to explore all your options. Look into what a traditional mortgage broker offers, research loans online, and compare those loans to subsidized loans. Consider these factors in combination with how flexible you’re willing to be.

At Ken Venick, we can help turn your mortgage goals into reality! Whether you are a first time home buyer or purchasing a multi-million dollar home, you’ve come to the right place. Ken Venick has over 30 years of experience in the mortgage loan business and can put you or your client in the right mortgage loan product for their unique needs. Contact us online today or give us a call at (443) 471-4310.