Benefits for First-Time Home Buyers
If you are a first-time homebuyer, you might be wondering if there are any perks available for you. Did you know that you don’t need to be buying your first home to be considered a first-time homebuyer? This means if you haven’t owned your primary residence in three years or more, you might be able to qualify. No matter your situation, you should be aware of the benefits that might be available to you.
First-Time Homebuyer Loan
If you qualify, there are a variety of loan assistance programs available to you. As mentioned before, if you haven’t owned your primary residence in at least three years, you could qualify. For instance, if you purchased a property in 2017 and sold it in 2020, and have been living with family since then, you would be able to apply for a loan. It is also worth mentioning that if you get married and have only rented, while your significant other has owned a home in the last three years, you will both qualify together as first-time homebuyers. There are many loans that have low interest and little to no down payment such as VA loans, FHA loans, and USDA loans. These can make the idea of owning a home a reality for those who need a place for their family to live and have a tight budget.
Are There Restrictions?
Some of these programs have income restrictions for buyers. If you are looking to apply for a USDA loan, and your household has anywhere from one to four people, your income cannot exceed $86,850. Your DTI (debt-to-income ratio) will also come into play for some of these programs so it is a good idea to do plenty of research and seek out the assistance of a loan officer who can guide you through the process.
First-Time Homebuyer Grants
Grants are unlike loans in that they do not need to be paid back. There are requirements that you will need to meet, and they will vary depending on the grant. The majority are awarded via local and state organizations, and they all have their own sets of guidelines that applicants need to abide by for approval. Assistance is also subject to availability. Some things that might be considered when deciding whether or not you qualify might be your income, the market price of the property, and your DTI. Some organizations might even factor in the type of career path you are on or want a promise from you that you will reside in the home for a certain amount of time and not just leave after a few months.
Down Payment Assistance
You may also be able to obtain assistance in making your down payment. These are also awarded by state and local organizations so the requirements will be different depending on the area you are trying to live in. The criteria that buyers need to abide by for the grant approval process also apply to down payment assistance programs. Some programs have applicants take a class that educates first-time homebuyers as a stipulation of approval. Your loan officer will be able to inform you about the options available in your area and help you understand whether or not you would be able to qualify.
Most Common Requirements
For VA loans, you will need to either be active duty military, retired from duty, or the spouse of someone who was active duty military but is now deceased. While there is no minimum FICO score for this loan, on average lenders are looking for anywhere from 580-620. These loans are provided by the Department of Veteran Affairs. If you are looking into a conventional loan and want to be able to put down as little as 3 percent, your credit will need to be at least 620 and your DTI needs to be under 50 percent. FHA loans are backed by the Federal Housing Administration, and as long as you have a 580 FICO score, you only need to put down 3.5 percent. If you are looking to apply for a USDA loan and take advantage of the no down payment perk, make sure your credit is at least 640 and that the property is in one of the designated areas. Buying your first home can be exciting, even if it’s not technically your first. Make sure you are educating yourself on all aspects of the process and not rushing through anything too quickly. A loan officer will be able to guide you through your journey while offering advice as needed and answering all of your questions. There are many perks available for those purchasing their first home, so make sure to take full advantage of them if you qualify.