Home Buyer Loan Programs

by Jessica King

First-time homebuyer programs are designed to help individuals and families purchase their first home by offering financial assistance, lower down payments, favorable interest rates, and other benefits. These programs can be offered at the federal, state and local levels and are often aimed at making homeownership more accessible, especially for those with lower to moderate incomes. Here are some common first-time home buyer programs. There are many other programs available for first-time home buyers, here are a select few:

FHA Loans (Federal Housing Administration)
- Key Features:
  - Lower down payment: as low as 3.5% for buyers with a credit score of at least 580
  - More flexible credit requirements: ideal for buyers with less-than perfect credit
  - Backed by the government, which reduces the lender’s risk
- Who is it for?
  - First-Time buyers and those with lower credit scores or smaller down payments

VA Loans (Veterans Affairs)
- Key Features:
  - No down payment required
  - No private mortgage insurance (PMI) is needed
  - Competitive interest rates
  - Backed by the VA, these loans are available for eligible veterans, active-duty service members, and certain members of the National Guard and Reserves
- Who is it for:
  - Eligible veterans, service members and their spouses

USDA Loans (United States Department of Agriculture)
- Key Features:
  - No down payment required
  - Low mortgage insurance premiums
  - Must be used in designated rural and suburban areas
  - Designed for low-to-moderate income buyers
- Who is it for:
  - Buyers looking to purchase in eligible rural or suburban areas with low to moderate income

Conventional 97 Loan (Fannie Mae and Freddie Mac)
- Key Features:
  - Down payment as low as 3%
  - Available for first time buyers with a minimum credit score of 620
  - Private mortgage insurance (PMI) is required if the down payment is less than 20%
  - Conventional loans limits apply
- Who is it for:
  - Buyers with moderate income who prefer a conventional loan but need a low down payment options