Buying a home can be one of the most rewarding experiences someone has ever experienced. The feeling of becoming a property owner for the first time can feel quite exhilarating.
Not to cut the magic moment short, but there will be a few financial hurdles that will pop up, especially if you fall into the category of a low-income earner. Traditional mortgage plans require high down payments and can be pretty unaffordable to most. But fear not, there are some programs out there that have first-time homebuyers in mind. For example, down-payment aids, grants, and low-interest loans are all designed to help low-income families when purchasing their first home. If you need a home but your financial situation is making it difficult, then keep reading to find out what first-time homebuyer financial aid programs may be available to you.
1. Energy Efficient Mortgage
EEM is backed by VA or FHA loan programs and is designed to allow borrowers to purchase energy-efficient homes by lowering utility bills. The loan can be used to make upgrades in regard to reducing energy use in your new home. There are no huge down payments required to improve your basic loan amount.
2. Federal Housing Administration Loan
An FHA loan is for individuals who have low credit scores. The thing that sets this program aside from the others is that it has helped several low-income earners own homes when compared to other plans. It comes complete with flexible requirements that make it less demanding and far more convenient when compared to most home loans. In fact, with a minimum credit score of 580, you can qualify for this loan at a rate of 3.5% down payment. If you’re in the 500-579 range, you can still receive a 10% down payment. It’s worth pointing out that this loan can’t be used with investment properties. Other requirements include bank statements, paycheck stubs, and tax returns. It’s a good idea to have steady employment to better your chances of receiving this loan.
3. Good Neighbor Next Door
This housing grant provides up to a 50% discount if you’re a police officer, teacher, or firefighter, and it’s offered by HUD. You will be required to pay a down payment of $100 and it can be used with VA, FHA, or conventional financing loans.
4. USDA Loans
USDA loans are best suited for moderate and low-income earners who reside in rural areas. They can provide the consumer with up to 100% of the housing finance. The loan also has income limits that vary depending on where you live. To qualify for a USDA loan, it’s required that possess a credit score of 640 or higher. If you have an insufficient score, then you will likely be asked to provide additional documentation detailing your payment history. This type of loan requires little to no down payment.
5. Local First-Time Grants
Various cities and states have grants and programs to appeal to new residents. The program is available and one of the best things about it is it doesn’t need to be repaid. It also comes with low interest and deferred payments that even cover the closing cost of the loans well as the down payments. If you’re considering this program, check with the housing authority website in your state first.
6. VA Loan
If you are a veteran or are currently serving in the active military, chances are you may be eligible for this loan. The loan is fully backed by the Department of VA and comes with a low-interest rate. However, there is a funding fee but the charge can be combined with the total cost of the loan. If you are a service member, it’s highly possible that you may be exempt from paying the cost altogether. There is no minimum credit score or PMI needed to qualify for VA loans
7. Fannie Mae HomePath ReadyBuyer
The program is designed to help those who are looking into buying a foreclosed home that was originally owned by Fannie Mae. The program gives you up to 3% closing cost towards the property purchase and perhaps the only challenge here is that it may be difficult to find such a listing.
8. Native American Direct Home Loan
NADL is designed strictly for native veterans. As a Native American, this loan allows you to qualify and purchase property on acknowledged trust land. You should have a legal eligibility certificate from the Veterans Administration and hold a credit score of over 640 to have the best chance at qualifying. This type of loan should not be used for investment purposes.
9. 203K Rehab
This loan is designed for those who are looking into buying a fixer-upper. It is an extension of the FHA loan and aside from handing you the money to buy a home, you also get some extra cash to take care of the renovations in one single loan. This makes it ideal for first-time homebuyers.
10. Conventional 97 Mortgage
This is a loan program that was created by Freddie and Fannie to assist first-timers to purchase homes. It allows you to borrow money with the lowest down payment of only 3%.
11. Housing and Urban Development
This program aims to sell all FHA foreclosed homes that have stayed HUD website for more than half a year. You can also look for various grants that cover closing costs and down payments from the website as well.
In Conclusion
It should be a personal goal at some point in your life (sooner rather than later) to have someplace you can hang your hat and call home. Not only is this a great achievement but to most, it’s a necessity. Perhaps the biggest challenge is that housing prices are constantly rising, making this task more difficult than it should be. Finding a home, especially with a low income may sound like a dream, but if you look hard enough, even with little money, you’ll likely find a program that works perfectly for you.