There's no question about it: Buying a first home is a big financial commitment. In most cases, a home is the largest single purchase an individual or family will make in a lifetime. However, because of the tax advantages afforded to homeowners, buying a home also can be one of the best financial decisions you'll ever make.
Problem is, many would-be homeowners remain renters simply because they mistakenly believe mortgage lenders require that buyers come up with 20 percent of the purchase price as a down payment. While it's true lenders feel it's less risky to work with buyers who are able to bring a substantial down payment to the table, the standard 20 percent requirement is fast becoming a relic of the past. In recent years, lenders have become more flexible in working with first-time homebuyers by creating a variety of special programs that require only a small down payment. These programs, combined with the most favorable interest rates in two decades, have encouraged growing numbers of renters to consider the tremendous benefits of home ownership.
While the list of programs offered by individual lenders is too extensive to mention in detail, here are some common programs you are likely to come across as you work with your real estate agent to purchase your first home:
Federal Housing Administration (FHA): FHS mortgages allow homebuyers to purchase a home with as little as a 5 percent down payment, and to finance all non-recurring closing costs. The current maximum loan amount in most urban markets is $151,725. In addition, borrowers are allowed to use up to 41 percent of their gross income toward paying mortgage debt ? well above the ratio allowed under most private programs.
Department of Veterans Affairs (VA): VA mortgages allow veteran or active service personnel purchase home with no down payment, up to the current maximum price of $184.000. However, there is no purchase price limitation for buyers able to make a down payment. Like the FHA program, VA borrowers can put up to 41 percent of gross income toward their mortgage debt.
Mortgage Revenue Bonds and Mortgage Credit Certificates: Mortgages funded with these instruments typically require a minimum of 5 percent down and have interest rates that are 1.5 to 2 percentage points below conventional 30-year fixed rates. These types of loans, offered by state and local housing agencies, are available only to first-time homebuyers. There generally are income and purchase price caps that vary, depending on where you plan to buy.
Private Mortgage Insurance: Most major lenders offer privately insured mortgages, which generally require a 10 percent down payment (although some lenders offer loans with a 5 percent down payment to buyers with exceptional credit). These loans typically are not limited by maximum loan amount or purchase price limitation.
Community Homebuyer Program: Through their networks of mortgage lenders, the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) offer Community Homebuyer Program loans. These programs require a 5 percent down payment, 3 percent of which may be a gift. To further help buyers qualify, applicants may use 38 percent of their gross income. Currently, the maximum loan amount available through these programs is $203,150.
Clearly, there are a lot of options for first-time homebuyers. While lenders will be more than happy to share information about their own programs, you can save yourself a good deal of time by first selecting a professional real estate agent who is experienced in working with first-time buyers in the areas where you plan to buy.
An agent who focuses on first-time buyers will know from experience which lenders in your area offer a low down payment program that will meet your unique needs.
Today, taking the first step toward owning your own home is easier than before. Your real estate agent is your best resource for finding innovative ways to help you come up with a down payment and qualify for financing. There's certainly no need to wait until you've saved a 20 percent down payment!
About The Author
W. Troy Swezey is the author of "EASING YOUR WAY INTO HOMEOWNERSHIP: A GUIDE TO LOW DOWN PAYMENT MORTGAGE PROGRAMS." As a Realtor at Century 21 Paul & Associates, he has helped many individuals with their real estate needs. Visit his web site to download his free e-book, "REAL ESTATE SECRETS EXPOSED." http://www.TroyIsMyRealtor.com or mail to: TroyC21@usa.net
When considering investment properties, first of all, it must be... Read More
If you are considering buying a home or have spent... Read More
HOW TO SELL YOUR HOME FOR TOP DOLLAR1. Make your... Read More
Although real estate bankruptcy cases no longer dominate the bankruptcy... Read More
Signage, though quite fundamental in nature, plays an important role... Read More
If you are looking for a steady, income-producing investment that... Read More
If you are in the home buying or selling market,... Read More
From the desk of Colm Dillon ... Author "Residential Development... Read More
In his recent testimony, Alan Greenspan warned against the possiblity... Read More
Real estate investors know how to make money buying distressed... Read More
Why hire rental property management? Because doing it all yourself... Read More
We've all made bad decisions in the past. Don't you... Read More
Are you seeking your little corner of sun drenched heaven... Read More
This article will show you how to sell your home... Read More
Great, now how do I actually INVEST in real estate?Investing... Read More
Florida is known as the "Sun Shine" state, and the... Read More
The phone range and Peter was on the other end... Read More
Do you dream of making money in real estate? Do... Read More
Although architectural details, wall and floor coverings, modern conveniences and... Read More
Moving to a new community can be a great adventure,... Read More
Many who have bought and sold properties through Realtors numerous... Read More
When trying to sell a home, silence isn't always golden... Read More
Mexico is CHEAP! But its getting more expensive. As property... Read More
Hopefully all goes smoothly when you purchase your home. In... Read More
As you continue to read about real estate investing, you... Read More
Wouldn't it be nice to have Roger Hazard's design team... Read More
You hear it asked on the radio, in the newspapers... Read More
Here to stay and firmly established in the U.S. mortgage... Read More
Okay, so we all can agree - listings are the... Read More
You purchase homeowners insurance to protect yourself financially in case... Read More
1. What happens to the seller's credit rating when they... Read More
Over the last two years there has been so much... Read More
One big potential deal-killer in buying foreclosures is the homeowner.... Read More
An example of seller financing: Years ago I bought a... Read More
Signage, though quite fundamental in nature, plays an important role... Read More
The UK has gone property TV crazy. There are now... Read More
Many experts say you can't lose if you put your... Read More
Sue and Chuck DeFiore have the perfect solution for you... Read More
Books on real estate are a dime a dozen-and most... Read More
One questions many "for sale by owner" sellers... Read More
One of the biggest problems individuals just starting out have... Read More
Curb appeal is the most important challenge you'll face when... Read More
Here to stay and firmly established in the U.S. mortgage... Read More
For those of you who were not psychology majors the... Read More
It's been said many a time that overseas real estate... Read More
It is possible to save £1,000s selling your home privately... Read More
The Real estate market in Spain keeps gaining momentum and... Read More
Psssssssssst, Want to know a great way to make FAST... Read More
Building your dream home is a process that takes some... Read More
Homebuyers are a curious lot. They routinely ask thought-provoking questions.... Read More
For the past several years housing prices have risen dramatically.... Read More
Another real estate writer's mini course, full of promises and... Read More
To become a successful real estate investor it's vital to... Read More
The Echo Boomers or Generation Y currently make up about... Read More
The thought of selling a house strikes fear into most... Read More
Buying a house is the best way you can create... Read More
These real questions on buying undeveloped land are answered by... Read More
I can't emphasize enough how important it is to have... Read More
We are selling our house. We have lived here for... Read More
The concept of negative gearing has been originally developed to... Read More
Learn how to sell your property faster and at the... Read More
Here is a step by step guide for buyers looking... Read More
Land subdivision is a bit like helping Mom slice up... Read More
There has been a lot of talk lately about the... Read More
Buyers, borrower, closing costs can be divided into two categories.... Read More
Satisfying and lucrative real estate investment depends upon your correct... Read More
Real Estate |