BUYING YOUR FIRST HOUSE?

The information below will inform and assist you in saving money when it comes time to buy!

A first-time homebuyer program is a government-backed or sponsored initiative designed to assist individuals who are purchasing their first home. These programs are intended to make homeownership more accessible and affordable for individuals who might otherwise face financial barriers to entering the housing market.

1. Down Payment Assistance Programs: Discover how down payment assistance programs can make your first home purchase more achievable. Learn about grants, loans, and incentives that help cover the upfront costs, making homeownership accessible.

2. Low-Interest Rate Programs: Explore low-interest rate programs for first-time homebuyers. Benefit from reduced interest rates on mortgages, leading to lower monthly payments and significant long-term savings.

3. Closing Cost Assistance Programs: Learn about closing cost assistance programs that ease the financial burden of buying a home. Discover how these programs help cover fees such as appraisals, inspections, and title insurance.

4. Mortgage Credit Certificate (MCC) Programs: Unlock the benefits of MCC programs. Understand how they provide tax credits, lowering your tax liability and freeing up funds for other homeownership expenses.

5. Shared Equity Programs: Navigate shared equity programs designed to make homeownership sustainable. Learn how these initiatives provide financial aid in exchange for a share of property appreciation when you sell.

6. Grants and Subsidies: Explore grants and subsidies available for first-time homebuyers. Find out how these resources can assist with down payments, closing costs, and even home repairs or renovations.

7. Educational Programs: Discover the power of educational programs for first-time buyers. Gain insights from workshops and counseling, empowering you with knowledge about the home buying process and financial management.

8. Specialized Loan Programs: Learn about specialized loan programs tailored for first-time homebuyers. Find out how these loans offer flexible requirements, lower down payments, and reduced mortgage insurance premiums.

9. Targeted Area Programs: Explore programs that promote homeownership in specific areas. Understand how these initiatives provide incentives for purchasing homes in revitalizing neighborhoods or regions.

10. Veterans and Military Programs: Delve into programs dedicated to veterans and military personnel. Learn about favorable terms, such as VA loans, offering accessible pathways to homeownership.

11. Rural and Agriculture Programs: Discover rural and agriculture programs that offer competitive financing options. Understand how these programs provide low down payment requirements and attractive rates for homes in rural areas.

Some Loan types under the First-Time Home Buyer Program:

• Piggyback loans: This is an 80/10/10 loan, where the borrower obtains an 80% first mortgage and a 10% second mortgage, with 10% down. This loan’s advantage is that the buyer can avoid paying PMI. The 80% portion of the loan is usually a 30-year fixed-rate mortgage, and the 10% second mortgage is a home equity line of credit. A condo alternative is a 75/15/10 (interest rates are higher for condominium loans if the first mortgage exceeds 75%). Another advantage of the piggyback loan is that borrowers may be able to pay off the second mortgage without having to refinance the entire loan, reducing their monthly housing payments.

• Example
  Stan has $10,000 cash to put down on a $100,000 home. According to Fannie Mae and Freddie Mac guidelines, PMI is required by lenders on loans where the loan-to-value ratio (LTVR) exceeds 80%. So, if Stan finances more than 80% in a single loan, he’ll be required to take out PMI. To avoid this, he talks to his lender, who suggests a combination loan. Stan will take a primary mortgage for 80% of the $100,000 total, or $80,000; and a second mortgage for 10% of the total—or $10,000. Stan’s $10,000 cash down payment makes up the other 10% of the total. This is an 80/10/10 split.

• Home Ready: This is a Fannie Mae loan program for first-time homebuyers and repeat buyers. It features a 3% down payment option (which can come from a gift or down payment assistance program), the ability to use the income from a non-occupant co-borrower or non-borrowing household member, or room rental income (30% of qualifying income if criteria are met), and rental income from a basement apartment or mother-in-law suite to qualify.

• Home Possible: This is a Freddie Mac loan program that offers loan options with 3% and 5% down. The program also offers down payment assistance, and has the rental income as qualifying income possibility, similar to the HomeReady program.

• Good Neighbor Next Door: This HUD program offers housing assistance for law enforcement officers, firefighters, emergency medical technicians, and K-12 teachers who want to purchase property in a revitalization area. If they qualify, buyers in these professions may receive a 50% discount on the home's purchase price with a minimum down payment of $100 for an FHA loan. Otherwise, the minimum down payment requirement is 3.5%.

• FHA Section 203(k): This program allows the borrower of a "needs some work" property to borrow based on the home's value as improved, then use the extra proceeds (the amount between sales price and loan price) to rehabilitate the home. The good news here is that, in contrast to a straight FHA loan, the down payment requirement is 3%, not 3.5%.

• Neighborhood Assistance Corporation of America (NACA): No down payment, no closing costs, low fixed rates, and credit score is irrelevant. What must a buyer do to get in on this deal? Attend an “Achieve the Dream” homebuyers workshop as the first step in the qualification process. NACA is a HUD-certified, affordable homeownership advocacy and nonprofit group. NACA works with low- to moderate-income individuals and families, and first-time homebuyers are eligible for the program. Buyers must occupy the home for the term of the NACA loan, along with other program and participation requirements. The process can take up to a year. 

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