Best First Time Home Buyer Programs – Top 5 Picks

In comparison to most any other first time home buyer program in the country, the FHA loan program has easily helped the most people secure a new home. This is mostly due to their requirements, as their standards are a fair bit more lenient to meet than others are. It’s a long-standing program, going on 84 years since its initial founding, and has helped countless people find homes.

Their leniency in which they offer homes to first time buyers center around flexibility for low credit scores combined with a low initial down payment. To qualify, you only need a credit score of 580. With a score that low, you’ll only need to make a 3.5% down payment to start a mortgage on your new home. If you have a lower score than that, such as a score between 500 and 579, you can still qualify, but you’ll need to start with a 10% down payment.

You’ll, of course, also need steady employment, along with a few other qualifications like a Mortgage Insurance Premium and monthly payment. These loans that are given to you are government back, lenders that participate in this program are more comfortable in loaning out the necessary money to provide these homes.

As good as this program sounds, it’s still not risk-free, nor should you expect any of the programs you find to be. Defaulting, falling behind on your payments, and closing costs can make gaining full ownership of your home difficult. However, in comparison to many other programs, this one suits first time home buyers who have trouble securing loans with other lenders best.

If you’re a veteran who’s looking to purchase their first home, then the Department of Veteran Affairs has a program specifically catering to you. There are a few qualifiers to be met, as any loan will have, but the benefits provided are excellent.

To qualify for this first time home buyer program, you must first be certain that you meet the criteria. As it’s sponsored by the VA, you’ll of course need to be a veteran, so long as you’ve served at least 90 to 181 days of continuous service in the armed forces.

If you’ve served for 90 continual days as an active service member, you will also qualify. Those who were a part of the National Guard or Reserve member for six years are eligible, as well being the spouse of a veteran of service-member who died in the line of duty.

The requirements boil down to a select group of Americans who’ve served or were married to a now-deceased service member. Once you fit into any of these qualifications, you’ll then be given options on different types of mortgages. The advantage is that you won’t be required to make a down payment, though the mortgages are dependent on your military status.

Since these loans are government-backed, these loans offer competitive low interest rates, combined with no PMI requirement or prepayment penalty. With no insurance required, no down payments, and with reasonable fixed-rate payments on the mortgage, it’s an extremely good deal for military veterans.

In an effort to revitalize struggling communities around the country, the Good Neighbor Next Door program was established to incentivize community workers to change location.

As a program, it’s only available to people in certain careers:

For first time home buyers, this program presents an opportunity for growth and development for communities around the country. The houses that are primarily going to be available in this program are in areas in desperate need of improvement. These sorts of areas may be suffering from urban blight, rural abandonment, and others where people are reluctant to live in.

The primary requirements, beyond being in one of a select criteria of professions is to make a few commitments once you agree to a home. All homeowners are required to reside within the property they’re provided for 36 months. If the homeowners commit to this property for that time period, they are then able to receive a 50% discount on the list price of the home.

Suffice to say, 50% a home is a great deal. However, there are factors to consider, namely that these homes are going to be placed in revitalization areas. The location will almost certainly not be an ideal place to live for any number of reasons. When participating in this program, it’s best to first consider the balance between owning a home and the location that home will be in.

The U.S. Department of Agriculture has their own presence in the home buyer program market, aiming to secure housing for those interested in rural areas.

Low-income, first time home buyers that participate in this program can qualify for homes in select regions around the country. The definition of a rural area, however, is a little vague by the USDA’s standards. You may be able to find homes in suburban areas as well.

The most enticing part of this program is that the loans carry little to no down payments required on a house. This is balanced by the USDA insuring the lenders who are a part of the program. Furthermore, to actually qualify for the program, you’ll need to meet certain income requirements to be included in the low-income portion of Americans.

Also due to the low down payment nature of this program, you will need to be insured yourself. This insurance premium will factor into the monthly payments you’ll also be making to help pay off your mortgage. However, those premiums usually run about 1-2% of the total loan amount. It’s affordable, but nonetheless something to keep keen track of, especially for low-income homeowners.

To qualify for a USDA loan, there are certain criteria you’ll have to meet. For starters, you have to be low-income, meaning you aren’t making more than 115% of the median income for the area you’ll be living in. Your credit score should be at least 620, which makes the whole process more streamlined and easier.

It’s possible to secure a USDA loan with scores lower than 620, even lower than 580. The space between 620 and 580 will result in a closer look at your application. Scores lower than 580 are still possible to secure a loan with, but the difficulty is much higher with scores in that range. There are other criteria that are applicable toward a USDA loan, but primarily it revolves around your income, your intention to use that income on your mortgage, and having an applicable credit score.

The programs sponsored by Fannie Mae and Freddie Mac are two government-sponsored enterprises that have developed a market for homebuyers.

As two of the largest presences in the industry, they provide first time buyers the opportunity for their first home. Cooperating with local vendors around the country, their primary audience are low-income, low credit-score individuals who are looking to purchase a home.

The concept of their program is called a conventional 97% mortgage. Those who qualify for these programs are only required to put down a low 3% down payment to be given ownership over their home. However, this requires that you meet a certain credit score, namely as long as you can meet 620. With higher scores, potential homeowners are capable of securing even better down payments and mortgages.