First-Time Buyers

June 15, 2018

First-Time Homebuyers: Choosing the Right Loan Program

Keith Perry

Mortgage Banker

Making the decision to become a first time home buyer can be stressful. It’s filled with tons of questions and concerns that goes through your mind. The main concern is, “Am I making the right decision?” You rely professional help to guide you through the process hoping they have your best interest in mind. But at some point, you have to make the decision yourself about choosing the home and loan program best for you.

Being in the mortgage industry for over 12 years, two of the most common questions I hear from first time home buyers are:

  1. Will I get a good interest rate with my credit score?
  2. Are there any options for me other than a 20% down payment?

The answers to these questions will help make the determination on moving forward with your home purchase.  With the mortgage industry constantly changing (for the better), more loan programs are opening up to benefit home buyers. For example, FHA and conventional are two programs suited to help first time home buyers:

Government Loans

An FHA mortgage is guaranteed by the U.S. Government’s Federal Housing Administration (FHA). FHA loans are designed to help low-to-moderate income homebuyers afford a house with lenient credit score requirements and a low down payment option (3.5%). Other FHA benefits are allowing higher debt-to-income ratios (DTI) and monetary gifts that can be used to toward your down payment and closing costs.

Conventional Loans

There are also conventional loan options to attract first-time home buyers. Home Possible and Home Ready are two new programs that focus on first-time buyers. These programs serve low-to-moderate-income borrowers with expanded eligibility (similar to FHA) for financing homes in low-income communities. Benefits of these programs are down payments options as low as 3%, low interest rates, and discounted mortgage insurance.

Low Down payment options are always king as you don’t have to “break the bank” when purchasing your home. The average first-time buyer is either working on a limited income or has limited funds in savings, so why not take advantage of a loan program that understands? The process doesn’t have to be stressful. Do your research on both and trust your lender to have your best interest in mind when making a recommendation.

If you have any questions, or if I can help you in any way, contact me here or at 708-250-9876.

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