Find Out About the Top 7 First Time Home Buyer Grants and Programs

First time home buyer grants and programs are designed to promote homeownership and assist more families with getting into the home of their dreams. As a first time home buyer, you may not know where to turn for financing, especially if you do not have a high down payment or you have a poor credit score. Traditional mortgages can require down payments as high as 20 percent which makes it difficult for the average citizen to qualify. 

Fortunately, there are several first time home buyer programs that you may qualify for. These programs can reduce the qualifications that you must meet to obtain a mortgage, reduce or eliminate down payment requirements and provide you with competitive rates for a mortgage. 

By learning more about each program and grant that you could qualify for, you will be better prepared when embarking on your journey to become a homeowner for the first time. 

1. Learn About State and Local First Time Home Buyer Programs 

Many states and counties offer first time home buyer programs in order to assist families, particularly low- and moderate-income families, in becoming homeowners for the first time. These programs are often funded by federal grants, including those offered by the U.S. Department of Housing and Urban Development. 

Each grant or loan program will include a list of eligibility requirements that families must meet in order to qualify. Depending on the grant or program, you may be eligible to receive a variety of benefits, including assistance with down payments or closing costs. 

Check with your local county website for more information on the programs and grants that may be available to first time home buyers in your area. 

2. Find Out About the FHA Loan Program

If you are searching for bad credit home loans for first time buyers, then it is worth learning more about the FHA loan program. The Federal Housing Administration (FHA) insures mortgages for qualifying applicants in order to reduce a lender’s eligibility requirements for a mortgage and reduce the down payment amounts that borrowers are expected to pay. 

With an FHA-insured mortgage, you could be approved for a mortgage with a credit score as low as 500. With a credit score of at least 580, your down payment requirements can be reduced from 10 percent to just 3.5 percent. 

To qualify for this first time home buyer program, you must also have a steady employment, adequate debt-to-income ratio, agree to live within the home as your primary residence and agree to pay an annual mortgage insurance premium (MIP). 

3. Learn About First Time Home Buyer Benefits Through USDA Loans

First time home buyer down payment assistance is available through USDA loan programs. Similarly to FHA loans, this loan program insures a borrower’s mortgage in order to reduce financial risks to lenders, enticing lenders to lower their eligibility requirements for a mortgage. 

One of the best benefits that the USDA loan program offers is the elimination of down payment requirements in qualifying areas. Today, it is estimated that around 97 percent of the country is eligible for the USDA loan program. 

Not only do USDA loans eliminate down payments, but Mortgage Insurance Premium costs are about half a percent cheaper compared to FHA loans, making this loan program less expensive in the long run. 

4. How to Get a First Time Home Buyer Loan Through the VA 

If you are an active or retired veteran, you may qualify for a first time home buyer loan through the Department of Veterans Affairs (VA). VA loans are a fantastic choice for new homebuyers as these loans do not require mortgage insurance premiums, reduce closing costs and generally require no down payments. 

Similar to FHA and USDA insured loans, the VA insures a portion of all VA loans in order to reduce a lender’s eligibility requirement. As well, they ensure that qualifying applicants are provided competitive interest rates on their mortgage. 

5. How to Take Advantage of a Conventional 97 Mortgage

One of the most popular conventional first time home buyer programs is the Conventional 97 Mortgage program. This program is designed to help first-time buyers get into their dream homes without a government insured mortgage. 

With this loan program, buyers are only required to provide a down payment of 3 percent, making down payment requirements lower than that of FHA loans. However, unlike federally insured mortgages, the Conventional 97 Mortgage program does not reduce other eligibility requirements for a mortgage. 

6. How to Save With First Time Home Buyer Grants Through the Good Neighbor Next Door Program 

If you are a first time home buyer, you may be able to save up to 50 percent off the listed price of a qualifying HUD home through the Good Neighbor Next Door program. HUD homes are 1- to 4-unit residential properties that have been obtained by the United States Department of Housing and Urban Development (HUD) after a foreclosure on a FHA-insured mortgage. 

To qualify for this first time home buyer grant, you must be willing to live on the property as your primary residence for at least three years and you must either be a teacher (pre-K through 12th grade) or a first responder (law enforcement official, firefighter or EMT) that is serving the community in which you wish to purchase a property. 

7. How to Benefit from a HomeReady HomePath Mortgage 

The HomeReady Homepath program is a first time home buyer program that provides borrowers with 3 percent towards closing costs on a mortgage loan. Additionally, the program reduces a buyer’s down payment requirement to just 3 percent.