Ready To Make That First Move?
A Quick Guide to First Time Homebuyer Mortgages
There are several different types of mortgages that are highly popular among first time homebuyers due to their flexible credit and down payment requirements. These include:
- FHA Loans: Backed by the government, FHA loans are able to accept down payments as low as 3.5% and have lower credit score requirements. They also accept the use of down payment and closing cost assistance programs to help make purchasing a new home more affordable.
- Conventional Loans: A great option for those with good credit, conventional loans allow down payments as low as 3% and provide lots of term options to choose from. If you desire payment stability over the life of your loan, a fixed-rate loan is right for you. For those who are purchasing a starter home and don’t plan on being there more than five or seven years, the lower rates of an adjustable rate mortgage might be the best option.
- VA Loans: Only for military service members, veterans, and their families, VA loans offer up to 100% financing. This no down payment option and the ability to roll applicable closing costs into the mortgage make affording a first home easier with little to no out-of-pocket costs.
- USDA Loans: USDA mortgages were created to help low-to-moderate income families in eligible suburban and rural areas afford a home. They dramatically lower out-of-pocket costs at closing with their attractive 0% down payment and allowing closing costs to be rolled into the mortgage.
The Seller Could Help You Fund Closing Costs
When buying a new home, the buyer is responsible for all closing costs. However, you may be able to negotiate in your offer to have some of those closing costs paid by the seller. Called Seller Concessions, you can work with a willing seller to pay certain closing fees or a percentage of the total amount. This can help significantly lower closing costs and allow buyers to put more money down on the home. Work with your real estate agent to arrange this with your seller.
