Personal Finance

What is First Time Home Buyer Government Programs

The government of the United States of America has tried its best to help the first home buyer citizens. You qualify to be a first time home buyer if you have not owned a home for the last three years. The administration saw it very important to help the less fortunate Americans have a home they can hold.

For many years, eligible groups from different categories have been in a position to own homes by getting mortgage loans with zero or small down payments. The government availed the first time home buyer government programs through the states, counties and city governments.

Any first time home buyer has a lot of challenges to acquire a home and getting a down payment assistance program becomes very helpful. Most of these programs are in the form of grants, and individual beneficiaries may not even need to repay them at all. It helps alleviate the burden of home acquisition costs, thus improving people’s lives.

Who is eligible for government assistance programs?

First Time Home Buyer Government Programs

Very many categories of people are eligible for government assistance to buy a home. There are standards that you must be within them to receive a government home aid. Most of these standards rely on the net income while location also affects your eligibility to qualify for a home acquisition program.

The criteria vary from state to state. The military personnel, low and medium-income earners from the rural areas, police, teachers and firefighters are the primary beneficiaries. The Federal Housing Administration (FHA) and the National Homebuyers Fund are some of the popular government assistance programs.

As we had initially indicated, you can access them at the state, county and city level. The government has gone ahead and ensured that the programs are easily accessible by creating the US Department of Housing and Urban Development (HUD).

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The department provides a list of the locally available programs in each state and has offices distributed throughout the United States. Some programs combine first time home buyers and those that have owned the land before.

How can you benefit from the assistant programs?

It is not accessible to the extent of presenting your name to the authorities and getting a grant immediately. It is a process, and one must produce verification documents. Some effort must be input for you to succeed. Almost all states require you to undergo training about home buyers.

You have to part with some fee to take the course. To get a proper guide on which assistance to go for, you have to utilize the internet and visit your county websites to see which is available for you. You can also rich out the local authority offices and ask about the programs.

There are a lot of staff members who are ready to help. Again, talking one on one to them will give you first hand and elaborate information on the best home buyer assistance program. You have to understand that there are crucial things you should do to have a smooth way into acquiring a home.

What you should do before going for a home buyer government program

Every US citizen must understand that getting assistance to buy a home is not just that free. Some have g the wrong information to think that they require no money to benefit from these programs.

First, you need to bring at least $1000 into a closing. You can even bring more to increase the chances of succeeding. There are additional expenses, such as renovating a home, landscaping, and unavoidable repairs.

Another thing is checking whether you qualify. Don’t be duped. Get the right information; otherwise, you will be embarrassed to be told that you are not eligible, yet you travelled the way to the relevant offices. 

You should also study the prices keenly and make an informed decision on the best plan you can afford to pay comfortably. Check the interest rates and see if they suit you.

You must check your credit score. Each program has set specific minimum score that you should meet. If you fall under the set limit, then you should consider first improving your credit score to the required point.

First time home buyer loans with zero down

The most genuine home buyer loans with zero down payments in the United States are the United States Department of Agriculture (USDA) mortgage loans and the VA Loans. They have their requirements for one to qualify. These loans programs have 100% financing. It means that you pay 0$ as down payment upon qualifying for the loans. The government of the United States backs them.

1. USDA Home Loans

The United States Department of Agriculture offers these loans through private banks and mortgage companies. This program was introduced in 1949. Since then, the program has helped over 1 million people get homes at zero or very little down payment. They offer a 100% financing to eligible customers. You should note that you must pay a guarantee upfront fee of 3.5% of the loan amount.

Moreover, you must have a credit score of 600- 640. You must also be living in rural areas or near towns. Suburban residents may also qualify. If you live in major urban areas, then you are out. You must be a low income- to- middle earner to qualify. Most beneficiaries are farmers.

Which geographic areas are eligible for USDA Loans?

About 97% of the United States area is eligible for USDA Loans. It includes rural and suburban areas, and the percentage represents over 109 million people. USDA has maps showing suitable regions. You should check out your location in these maps and locate homes on sale.

It will give you an easy time as you go for a loan. An important thing to note is that the geographic map has not been updated for some time now. Some areas will become ineligible after the update. It is thus essential that you rush now and apply because you might be locked out.

USDA loan payment duration

There are two choices for the loan repayment. You can decide whether to choose a 15 year or 30-year repayment plan. They can’t make any adjustments. The two payment durations allows for low monthly submissions, thus making it easy for poor citizens to afford. They are also able to manage other financial needs.

PROS OF USDA LOANS

  • Zero down payment whereby you get %100 financing. It is the most attractive aspect of USDA Loans. It makes the loans very convenient
  • Government guarantee. In case a borrower defaults payments, then the government reimburses the lenders their money
  • The loans have long payment plan. You can choose between 15 and 30 years payment plan

CONS OF USDA LOANS

  • Limited only to rural and sub-urban areas
  • Only low and medium-income earners can benefit
  • It requires a good credit score

2. VA Loans

This kind of mortgage loan is available to veterans only. Some family members to the veterans also qualify to get these loans. VA loans were introduced in 1944 just after World War II to help the returning soldiers purchase homes and live comfortably.

Since its introduction, more than 24 million veterans have benefited. VA loans are also available to the currently serving military men and women. For you to qualify, you must obtain a Certificate of Eligibility (COE) from a VA eligibility centre.

PROS OF USDA LOANS

  • No down payments to the eligible citizens
  • The loans don’t have Private Mortgage Insurance. It is because they are government-backed. The beneficiaries don’t buy PM Insurance
  • Highly competitive interest rates
  • Easier to qualify. As long as you once served or are serving as a military officer, you can easily be eligible. The government guarantees the lenders when you fail to pay, and so they have fewer risks

CONS OF USDA LOANS

  • The loans are only for military personnel. The civilians are not allowed to apply unless you are a close family member to an army officer
  • They are limited to specific amounts. The maximum number you can get as a beneficiary is $424,100 only
  • You must obtain a Certificate of Eligibility (COE) from a VA eligibility centre. It is to ascertain whether you served or is serving as a military

Who are offering first time home buyer programs?

The following companies are offering first time home buyer loans. Check that does within your state. Each state has a particular lender.  

State Lender
Illinois IHDA lenders
Iowa Iowa Finance Authority lenders
Indiana IHDA lenders
New York SONYMA lenders
New Jersey NJHMFA lenders
Vermont VHFA lenders
Connecticut CHFA lenders
Massachusetts Mass Housing lenders
Pennsylvania PHFA lenders
Rhode Island  Rhode Island Housing lenders
Wisconsin WHEDA lenders
North Dakota NDHFA lenders
Alabama AHFA lenders
Arkansas ADFA lenders
Delaware Delaware State Housing Authority lenders 
Florida FHFC lenders 
Georgia Georgia Dream lenders 
Kentucky Kentucky Housing lenders

The above table shows some of the many lenders in many states of America. Each of the lenders has specific requirements which you must know. Interest rates vary from state to state, depending on the lender.

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