With home sale prices averaging $374,700 in the United States, it can take several years to save enough money to purchase a new home. First-time home buyers may shy away from purchasing a home for a few more years because of these prices. Whether you are living with 3 other friends in a 2 bedroom apartment, crashing on a couch somewhere, or staying with your parents back at home, we can all dream of buying a first home.
Source: Federal Reserve Economic Data
Here is your guide to first-time home buyer programs that can save you some serious cash.
FHA loans are insured by the Federal Housing Administration, an agency in the U.S. Department of Housing and Urban Development. They are offered to low-income home buyers who have credit scores at around 500.
To get approved for an FHA loan, the borrower needs mortgage insurance, the Upfront Mortgage Insurance Premium, and an Annual MIP. Separate payments will be made for both insurance types. The payments will be deposited into a US Treasury Department escrow account. Annual MIP payments are submitted every month by the borrower, which can vary depending on loan amount, length, and loan-to-value ratio.
FHA loans add attractive interest rates, smaller down payments, and smaller closing costs than a traditional 30-year conventional loan.
Home buyers with credit scores of 500-579 can get a down payment of 10%. Home buyers will credit scores over 580 can get a down payment as low as 3.5%.
We recommend talking to an FHA advisor to assess if this type of loan is right for you.
USDA Loan Programs
The U.S. Department of Agriculture offers a homebuyer assistance program. This program guarantees a home loan with the possibility of no down payment and fixed loan payments. Borrowers with a credit score of over 640 or higher can find themselves approved for this process, while borrowers with sub 640 will need additional documentation regarding payment history.
Why this program is attractive are their consistent and low mortgage rates for new home buyers.
The Good Neighbor Next Door Program
The very little known “Good Neighbor Next Door” program is sponsored by the HUD and provides housing aid to police officers, firefighters, emergency medical technicians and pre-kindergarten through 12th-grade teachers.
Borrowers who qualify for this program are eligible for a discount of up to 50 percent on a home selling price in certain areas called “revitalization areas”. The program requires a commitment to living at least 36 months in the home.
You can see if you qualify for this loan and see which cities are “revitalization areas” by visiting the HUD’s website.
Here are also 5 ways renters can qualify to buy a home.
Fannie Mae HomePath Ready Buyer Program
Fannie Mae and Freddie Mac are government-sponsored agencies who work with local lenders for low and moderate-income families.
These programs insured over 60 percent of apartment property loans in 2017. What makes them so attractive are their low interest and down payments rates of 3 percent of the purchase price.
With Homepath’s properties listed on HomePath.com, these foreclosed homes are owned by Fannie Mae and can equal up to $4,500 in savings on a home valued at $150,000. Buyers need to purchase and complete a homeownership education course, prices at $75, to be eligible for the program. Fannie Mae also reimburses the $75 course.
FHA 203k Loans
FHA 203k loans are for homebuyers looking to purchase a fixer-upper property. FHA takes the asking price of the home and factors in the improvements after they have been made. The home buyer can borrow funds needed to complete the project and pay the asking price of the home.
The best part about the 203k loan is that interest rates can be as low as 3 percent, however, this varies by county.
Join the Poplar Program
If you’re renting now but planning to eventually buy a home, burning 35 to 50 percent of your income each month on rent does not always feel like the best way to save for your future. In a traditional rental situation, you will never see a penny of your rent come back to help you in the future. Instead of building equity in a home you own, you get short-term convenience at a steep price.
Poplar Homes is pioneering a new way to rent with the launch of a first-of-its-kind product named Poplar Street. When you sign up for Poplar Street, you can earn 20 percent back on each month’s rent payment as a credit towards buying your first home. By saving a portion of your rent for a future home purchase, you get the convenience of renting plus the tools to build equity in your future home purchase.
Get early access to the Poplar Street below to be the first to know about homes enabled with the program or to convert your current rental to a Poplar-enabled home.
Start saving for your dream home
Move into a Poplar Home and earn back 20% monthly rent for a future home.