The decision to purchase a home for the first time may be the most pivotal financial choice an individual can make. First-time home buyers may feel that they are at a disadvantage when compared to those who have previously owned a home, but there are actually quite a few programs that are designed to assist them. First-time home buyer loans are the perfect opportunity for individuals who may not qualify for traditional home loans and have limited funds for a down payment.
What First-Time Home Buyer Loans?
First-time home buyer loans are mortgage programs designed for circumstances that individuals who have never previously purchased a home typically have. Generally speaking, these loans permit higher loan-to-value ratios for approval (LTV). First-time home buyer programs generally give it’s buyers favorable terms and advantages not available through other programs.
Today’s First-Time Home Buyer Demographics
What Kinds of First-Time Buyer Home Loans are Available?
Federal Housing Administration (FHA) Loans
Veterans Affairs (VA) Loans
USDA Rural Development Loans.
What Are the Pros and Cons of First Time Home Buyer Loans?
- They require little or no funds for a down payment.
- They’re well-suited to individuals with lower credit scores and require less stringent loan qualifications.
- They have low interest rates.
- They may penalize individuals who sell their home shortly after purchasing it.
- They may include higher fees and closing costs than lower LTV loans.
- While first time buyers may not have to pay PMI to a bank, they may have to pay for mortgage policy provided by the loan program itself.
Individuals who are considering buying their first home may find the process daunting at first. There are considerable resources out there for first time home buyers, however, as well as special loan programs. A counselor from the U.S. Department of Housing and Urban Development (HUD) potentially can be helpful and can provide sound advice for millennials. It’s true that homeownership can sometimes seem to be beyond all reach, but the truth is that there are more opportunities for first-time buyers than there have been in years.