There are few things as exciting, and overpowering, as buying your first house. The first obstacle most first-time house buyers face is finding the cash they need for a down payment. Another difficulty is finding a lender that will give them the time of day if they’re low-income consumers or do not have much of a credit history. The good news is that there are national programs designed to help first-time buyers, and nearly every state has its own first-time customer app.
First Time Buyer Loans
Federal Housing Administration-approved lenders offer loans directed at first-time buyers’ special needs. Such loans offer greater loan-to-value prices, fixed or adjustable interest rates, and less-demanding income and down payment requirements than conventional loans. The FHA allows buyers to borrow up to 97 percent of the value of the property. FHA enables higher debt-income ratios–that the proportion of your income spent on paying debts– more than traditional lenders and lets you utilize a loan or gift to pay all of your down payment and closing prices.
Down Payment Assistance Loans
Lenders offer down payment loans to first-time debtors to help them cover their initial down payment. Borrowers can combine a down payment assistance loan using a traditional first-time loan to receive 100% financing for their first home. Most states provide these loans as a means to stimulate the market and help low-income individuals into the home market. In California, for example, the California Housing Finance Agency offers the Affordable Housing Partnership Program (AHPP) and the California Homebuyer’s Down Payment Assistance Program (CHDAP) to qualifying borrowers.
Graduated Payment Loans
Graduated payment mortgages are an alternative to traditional loans for low-income buyers who expect their income to grow in the next five to ten years. Payments start so low they do not even cover the interest on the loan, then raise every year. This system enables individuals to apply for a mortgage sooner than they’d be able to via a traditional mortgage.