Most, if not all, of the large home loan lenders, have programs for first-time homebuyers. An FHA first-time homebuyer loan, for instance, allows lower qualifying credit scores and lower down payments than a traditional loan. That does not mean an FHA loan--or, for that matter, a loan at all--is a risk-free decision, even one made under the First- Time Homebuyer Program. Because governmental entities underwrite many first-time homebuyer programs, the qualification requirements are much less stringent than those of a traditional loan. First-time homebuyer programs are a form of financial aid extended to qualified buyers, typically those who meet specific income restrictions and have solid credit scores.
There are several programs and First-Time Homebuyer Grants that can help you afford your first home purchase, typically helping with the down payment and closing costs. Bankrate has pulled together some of the best first-time homebuyer grants, programs, and loans nationwide, which could help get you into your first home without the need to put down a 20% down payment. Gifts or loans from relatives, as well as programs such as 80/10/10 Acombination A loans, can help you avoid PMI.
Some lenders will even let you borrow with a credit score between 500 and 579, as long as you can put down at least 10%. Conventional mortgages generally require at least a 620 credit score and a 36 percent debt-to-income (DTI) ratio. FHA loans require at minimum a 3.5% down payment on the purchase price. PMI -- Private mortgage insurance helps to protect lenders in case the borrower cannot make payments and is foreclosed upon. The HFAs Preferred Conventional Loan in Florida is a 30-year fixed-rate mortgage that gives first-time homebuyers a private mortgage insurance waiver. VA loans -- People who have served in the military, or are serving, or those with a spouse who has served, can obtain VA loans through the United States Department of Veterans Affairs, with some loans requiring no down payment and no mortgage insurance.
Homebuyers using either HomeReady or Home Possible can access reduced mortgage rates, and they may use income from roommates and other family members to help satisfy a lender's home equity requirements. Don't be surprised if are required to take First-Time Home Buyer course to qualify for the down-payment assistance grants or loans. If it is been at least two years since you experienced bankruptcy, it should not be too difficult to qualify for an FHA loan, either. Have proper documentation regarding your income, savings, credit score, and other financial information available when filling out a loan application. Things that you will have to go through and pay for during the last phase of the purchase can include having the home appraised (mortgage companies need to do this to protect their interest in the home), doing a title search to ensure no one except the seller's agent has an ownership interest in the property, getting a private mortgage insurance or a jumbo loan if you are making a down payment of less than 20%, and filling out the mortgage papers.