First Time Home Buyer Programs

Conventional Loans

Conventional loans are the most popular option. With good credit, low debt-to-income ratios, and at least a 5% down payment, you can get this great financing program. Conventional borrowers enjoy low interest rates and the choice between a fixed and adjustable rate loan. 

Advantages:

  • No mortgage insurance if you put down at least 20%
  • Cancelable mortgage insurance after you owe less than 20% of the home’s value
  • Can use on an owner-occupied, investment, or second home

Disadvantages:

  • Tougher underwriting requirements than government-backed loans
  • Your credit score determines the interest rate and PMI rate
  • PMI increases your monthly payment
First Time Home Buyer Loan
FHA first time home buyer programs

FHA Loans

FHA loans offer easier guidelines because of the FHA guarantee. The FHA pays the lender back a portion of your mortgage if you default. This makes it easier for FHA-approved lenders to write loans for borrowers with less than perfect credit, high debt ratios, and low down payments.  FHA is one of our top first time home buyer loan programs. 

Advantages:

  • Only need a 3.5% down payment and 100% of it can be gift funds
  • Low credit score requirements
  • Sellers can contribute as much as 6% of the sales price to help with closing costs

Disadvantages:

  • The FHA charges upfront mortgage insurance and annual mortgage insurance (paid monthly)
  • Only for owner-occupied properties
  • Stricter appraisal guidelines

VA Loans

Veterans or current members of the military may be eligible for VA home loan benefits. The VA guarantees the loan for veterans with at least 90 days of service during wartime and 181 days during peacetime. Borrowers don’t need a down payment and the underwriting guidelines are flexible.

Advantages:

  • Get 100% financing (no down payment)
  • Low credit score requirements
  • No mortgage insurance requirements

Disadvantages:

  • Only veterans with ‘other than dishonorable’ discharge from the military are eligible
  • The VA charges a funding fee
  • Only for owner-occupied properties
VA Loan- first time home buyer program
USDA Rural Development Loans

USDA Rural Development Loan

Low-to-moderate income families looking for a home in a rural area benefit from the USDA loans. The USDA guarantees the loans, which offer 100% financing and flexible underwriting guidelines. As long as your total household income is less than 115% of the average income for the area, it can be a good option.

Advantages:

  • Get 100% financing (no down payment)
  • The seller can cover the closing costs
  • Low interest rates on non-urban homes

Disadvantages:

  • The USDA charges upfront mortgage insurance and annual mortgage insurance
  • The home must meet USDA standards
  • Only for owner-occupied homes

FHA 203k Loans

Fixing up a home becomes a possibility with the FHA 203K loan. Whether you are buying a home or renovating your existing home, the FHA 203K loan offers one loan to buy (or refinance) the home and pay for the renovations. The FHA 203K loan is for repairs/renovations totaling more than $35,000 and includes structural repairs. You do need blueprints and professional contractors to do the work for this program.

Advantages:

  • Borrow as much as 96.5% of the homes after-improved value
  • Low credit score requirements
  • Get money to buy and renovate a home all in one loan (no need for a home equity loan)

Disadvantages:

  • Only for owner-occupied homes
  • The FHA charges both upfront and annual mortgage insurance
  • Contractors get paid in phases rather than all at once
FHA 203k Loans

FHA Limited 203k Loans

Home repairs don’t always total more than $35,000 or require structural work. Cut down on the paperwork and requirements with the FHA Limited 203K. This loan provides financing to buy (or refinance) and make renovations on a home up to $35,000 as long as no structural work is necessary. This is a great option for cosmetic or simple changes on a home.

Advantages:

  • Put down as little as 3.5%
  • Flexible underwriting requirements
  • Reduce the need for a second mortgage, more paperwork and fees

Disadvantages:

  • Only for owner-occupied homes
  • Pay both upfront and annual mortgage insurance (monthly)
  • Only limited repairs/renovations apply 
FHA 203k Limited Loan

HomeStyle Renovation Loans

This is the conventional version of the ‘fixer-upper’ loan. The HomeStyle loan provides funds to buy (or refinance) and fix up a home. You can make many renovations to the home as long as the changes add to the home’s value.

Advantages:

  • Only need a 5% down payment
  • Mortgage insurance is temporary (until you owe less than 80% of the home’s value)
  • Fix up or renovate an owner-occupied, investment, or vacation home

Disadvantages:

  • Stricter underwriting requirements than the FHA version
  • The improvements must be a permanent part of the home
  • Lower credit scores require higher PMI rates
HomeStyle Renovation Loan

Are You A First Time Home Buyer?

Take our short quiz and see what you can qualify for.  No credit pull needed