First-Time Home Buyer Programs | What You Need to Know About the Different Loan Programs

Overview of Our Guide to First-Time Home Buyer Programs

If it’s your first time buying a home, you may be astounded (and overwhelmed) with all the different options that are available to you. But where should you start, and what should you know?

Let this article serves as your first-time home buyer guide to direct you through the different loans for first-time home buyers that are available.

You’ll also get tips for finding first-time home buyer programs with bad credit exceptions and tips for finding loans for first-time home buyers.

Source: Allegiant Home Loans

So, let’s explore the tips and information on first-time home buyer programs that this first-time home buyer guide has to offer.

What You Need to Know About the Different Loan Programs

Are there any first-time home buyer programs with bad credit exceptions?
What first-time home buyer programs are available?
What are some first-time home buyer benefits?
Are there loans for first-time home buyers?
What are the different first-time buyer program?
What are some tips for finding first-time home buyer programs?

First-Time Home Buyer Benefits to Consider

There are several advantages associated with being a first-time home buyer. These advantages range from tax breaks to savings on private mortgage insurance. Check out these first-time home buyer benefits you may not have considered:

You can take advantage of many first-time home buyer programs.

As a first-time home buyer, you have more options thsn other buyers to get a home without putting too much money down or with securing loans for first-time home buyers. These opportunities can include first-time home buyer programs that reduce down payments.

You can also take advantage of first-time home buyer programs that subsidize interest. For example, if you have low-income, you may qualify to participate in a first-time home buyer program that allows third-parties to pay your loan interest.

This interest subsidy can be available from charities, the government, individuals, and organizations. You can also take advantage of first-time home buyer programs that limit fees imposed by lenders, such as a first-time home buyer program that lowers your required down payment.

By taking part in these first-time home buyer programs, you can save on the cost of loans for first-time home buyers and on the expenses associated with owning a home over a long timeframe. These 1^st-time home buyer programs also make it more affordable for you to buy a home.

You can potentially deduct mortgage points.

The upfront prepaid interest that you offer at closing for a better mortgage rate, or mortgage points, can be deducted your first year as a home buyer. In order to do this, you have to meet specific qualifications, such as the requirement that the loan is used to build or buy your primary residence.

You can deduct real estate taxes.

Any property taxes you pay during your closing to reimburse the seller are deductible from your taxes. Additionally, most local and state governments in the United States collect taxes on property. Lenders often will incorporate these property taxes into your monthly mortgage payment and secure the funds in an escrow account to pay the correct parties. However, if you opt to pay the property taxes on your own and not use an escrow account or have it spread out monthly, you can often deduct these out-of-pocket expenses from your taxes as well.

You can achieve the benefit of capital gains in the long haul.

If you lived in your home at least two years out of any of the last five years, you can qualify to avoid the taxes on your property should you decide to sell. The better part of this deal is that those two years do not need to be back-to-back.

For example, if you are selling your home in 2016 but lived there in 2012, moved to another home in 2013 but moved back for only one more year in 2014, you can still avoid paying taxes on the first $250,000. If you are married, this amount goes up to $500,000. However, keep in mind that this amount and ability to avoid taxes and benefit from capital gains is subject to the current tax laws in place for the year of the sale.

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You get to deduct your mortgage interest.

Image Source: First-Time Home Buyer Programs

Thanks to the Home Mortgage Interest Deduction, you’ll be able to the deduct the interest from your first secured mortgage as long as it’s less than $1 million and your primary or vacation residence. This is one the most ideal first-time home buyer benefits that many home buyers can take advantage and enjoy.

Furthermore, you don’t have to own the home along with your spouse to reap one of the best first-time home buyer benefits.

If you file your taxes together, then the deduction will count whether your spouse, you, or both you and your partner own the home. Your lender will also send you the right tax document to keep track of this first-time home buyer benefit so that you can have peace-of-mind.

You may be able to deduct private mortgage insurance or PMI.

Another benefit of first-time home buyers is the opportunity to use your private mortgage insurance or PMI as a deduction for your taxes. This was the case for 2015 taxes. However, keep in mind that tax laws can change.

Therefore, make sure you check the correct tax information with the IRS or consult a tax attorney or professional for the most up-to-date and applicable information on taxes.

Don’t Miss: Steps to Buying a House | What You Should Know: House Buying Process – Step by Step

Loans for First-Time Home Buyers

Source: Treorealtors.com

FHA Loans

Many Americans turn to loans for first-time home buyers provided by the Federal Housing Administration. These FHA loans are appropriate for first-time home buyer programs with bad credit applicants.

That’s because the minimum credit score required to obtain the loan is lower than most conventional loans. Part of these loans are guaranteed by the Federal Housing Administration so that lenders can offer financing options to a wider audience seeking loans for first-time home buyers.

USDA Loans

Source: USDA

If you live in a rural location and want assistance with a first-time home buyer program that offers a loan for individuals with low income, then you can try the U.S. Department of Agriculture, or USDA.

The Single Family Housing Guaranteed Loan Program offered through the USDA allows you to finance the home without a down payment and reduces the risk of this type of finance to lenders by 90 percent so that they can provide loans for first-time home buyers who are cash-strapped.

However, there are income-eligibility requirements that you must meet, and the address of the location that you want to live in must be located in an eligible rural location.

State Programs

If you’re looking for loans for first-time home buyers, check your state. Many states offer assistance with loans for first-time home buyers, including Washington, Texas, and Massachusetts.

For example, the state of Arizona offers assistance with obtaining down payment assistance in conjunction with a 30-year mortgage loan for first-time home buyers through its HOME PLUS loan program.

The mortgage has a fixed interest rate. As of 2016, you can participate in this first-time home buyer program if you make less than $92,984, the house costs less than $371,936, you will live in the residence as your primary home in Arizona, and you complete an education course for homebuyers.

Nonprofit Organizations

In addition to federal and local government loans, you can sometimes turn to nonprofit organizations to get help with getting loans for first-time home buyers. Some nonprofit organizations even offer loans for first-time home buyers based on their occupations.

For example, the State Affordable Housing Corporation offers several public workers down payment help with a 30-year mortgage that has a fixed-interest rate. This program is called the Homes for Texas Heroes program and is aimed at workers such as firefighters, county jailers, and emergency medical personnel.

VA Loans for First-Time Home Buyers

Source: US Department of Veteran Affairs

If you are a veteran or a serviceman, or even the spouse of a veteran or serviceman, you may be able to participate in a first-time home buyer program that offers loans for veterans.

This loan program is offered by the U.S. Department of Veteran Affairs and awards generous lending options for first-time home buyers who qualify.

For example, first-time home buyers who qualify for this program can get help in avoiding mortgage insurance of a down payment. However, the program can take some time for approval.

First-Time Home Buyer Programs with Bad Credit

When you’re looking for a first-time home buyer guide to getting a home loan when you’re credit is not up to par, you may be overwhelmed with all the available information.

Bad credit may hinder you from getting the best deal, but it won’t completely keep you out of getting a home loan. Here are a few tips for finding first-time home buyer programs with bad credit exceptions:

Check your local HUD office for counseling.

Finding first-time buyer programs with bad credit exceptions doesn’t have to be difficult when you have the guidance of a trusted professional. That is why you can take advantage of the HUD counselors in your area.

They can help you know where to start your journey for finding first-time home buyer programs with bad credit applications so that you can focus on the right lenders. Furthermore, your HUD counselor will help you understand the pitfalls and advantages of using these types of programs.

Surf the internet.

When you’re looking for a first-time buyer program with bad credit exceptions, you can find plenty of information online. Just be careful to filter out the fluff. Look for official websites and check out reviews before even scheduling the first meeting to discuss your lending options.

Repair your credit in the process.

While you may have bad credit, it is not impossible to start the process of repair. Check out your credit score before shopping different lenders to determine which lender may help you the best first-time home buyer programs with bad credit.

Tips for Finding First-Time Buyer Program

So, are you ready to participate in a first-time home buyer program, but need help finding one? You are not alone.

Use this first-time home buyer guide to get some tips for locating loans for first-time home buyers and finding 1^st-time home buyer programs. Also, consider alternatives to 1^st-time home buyer programs with the help of this first-time home buyer guide.

Start local.

You can check directly with your city or county to see if they have any loans for first-time home buyers. Additionally, state programs sometimes offer assistance to help you put up a down payment, such as a first-time buyer program that helps with your down payment.

There are also local 1^st-time home buyer programs that can aid in obtaining low or fixed interest rates. You can also check the Department of Housing and Urban Development (HUD) website for information regarding 1^st-time home buyer programs.

Stay educated.

Always take time to learn about available first-time home buyer programs. You can check HUD online for information regarding meeting loan requirements. Also, check your local library for different first-time home buyer programs that may be available.

Start early.

The earlier you start your search, the more likely you can explore all of the lending options available to meet your needs. It also gives you time to straighten up any adverse situations that may hinder you from getting a loan.

Tap alternatives.

If you choose not to go with a first-time home buyer program after a long search and want to manage on your own, you may be able to tap into assets you already own. For example, if you have a Roth IRA or traditional IRA, you are allowed to take as much as $10,000 sans the 10 percent penalty fee when purchasing a home.

Keep in mind that you are considered a first-time home buyer if you have been residential property owners within the last three years.

That means that it’s okay to tap these funds even if you were a previous homeowner as long as you haven’t owned a personal home within the last three years.

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Final Thoughts

If you’re wondering where you can find first-time home buyer programs, always start in the area you plan to live.

You can also look toward your state or county to determine if there are any first-time home buyer programs that you may qualify for in lieu of conventional loans.

Even if you go after first-time home buyer programs with bad credit exceptions, you still want to make sure you are working on improving your credit rating so that the next time you decide to purchase a home, your options are not limited.

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