Buying a home can be complicated and knowing which loan program is right for you can be a challenge. If you are a first time home buyer or an applicant in need of a no money down home loan there are many programs available to you. Every loan program has different requirements for credit, income and the property you plan to buy. We will go over each program in detail to help you better understand your options.
The best home loan programs for first time home buyers in 2019 are FHA, USDA, VA, and Home Possible. All three programs offer little to no down payments, low interest rates, and flexible credit requirements.
USDA developed a loan program for first time home buyers in rural areas. Backed by the Department of Agriculture, the money is guaranteed against default. Because of this, the bank can lend you 100% of the sales price with only a minor risk of loss. USDA pays a portion of the loan if the bank incurs losses from a foreclosure so that banks are more willing to lend you money.
FHA financing works similar to USDA because HUD backs/guarantees the loan offered to minimize any losses the bank could potentially have. These loans are a great program for first time home buyers with damaged credit and has the lowest interest rates available.
VA is the best loan program available in today’s market. They offer 100 percent financing, low interest rates, and no monthly mortgage insurance. A VA loan payment is typically 5-10% less than other programs. You must have served in the military and met certain requirements during your time served to qualify for a VA Home Loan.
The VA home loan works similar to FHA and USDA in that the Department of Veterans Affairs guarantees the loan and banks are more likely to lend money because there is little risk of loss. The program was originally created to offer long term financing to eligible veterans or their surviving spouses. VA now offers financing opportunities for Veterans in locations where financing was not readily available.
By guaranteeing mortgages, VA opened up lending in the rural communities that needed it most. The original Servicemen’s Readjustment Act was passed by Congress in 1944 and offered a variety of benefits to America’s veterans. One benefit was the authorization of VA to guarantee or insure home loans. By guaranteeing home loans, banks were not taking risks by offering 100% financing to eligible veterans. Having a common sense approach to underwriting, VA has the least amount of defaults out of all the offered loan programs. I personally attribute this to the sense of responsibility acquired as a member of the military and the great clients we get to work with.
This Freddie Mac loan program offers first-time buyer options with flexible credit underwriting. Home Possible provides help to low income borrowers and helps them realize the dream of owning a home.
Home Possible only requires a down payment of only 3 percent and has more options to responsibly increase homeownership for borrowers. handymen can use sweat equity to assist in meeting their down payment and closing costs. Co-borrowers who do not live in the home can be included for a borrower’s one-unit residence. First time home buyer applicants are permitted to own other properties with competitive pricing and the ease of a conventional mortgage.