First Time Buyer Programs

Buying your first home can be a daunting prospect. For someone who has never gone through the process, applying for a loan and putting together money for a down payment might seem out of reach. Luckily, there are several first-time buyer programs available specifically to help a new buyer purchase their first home. While some of these programs are designed for low-income applicants, some of these programs are available for buyers who don’t meet the low-income criteria. Many people simply believe they can’t afford a home and are surprised when they learn their mortgage would be equal to or less than what they’re currently paying for rent.

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Popular First-Time Buyer Programs

Although there are many first-time buyer programs on the market, here are a few of the most popular ones:

  • FHA Loan – This is the most common option for a first-time home buyer. The FHA loan is a federally backed loan that allows the buyer to put down a smaller down payment, typically has a competitive interest rate, and is more lenient when reviewing the buyer’s credit history.
  • Individual Development Accounts (IDA) – An IDA is a savings account that is set up for first time home buyers who need assistance saving for a down payment. When the home buyer deposits money into this account, the bank or lending institution offers a savings match. This can be a 1:1 ratio or higher. There is typically a cap on the amount of money the lending institution will match.
  • Good neighbor next door – This type of loan is available for teachers, law enforcement officials, firefighters, and emergency medical technicians who want to buy a foreclosure in a “revitalized” area. It’s a specific loan, but for those who qualify, properties are generally 50% below market value.
  • Individual development account
  • Energy Efficient mortgage – Known also as a “green loan,” this type of mortgage allows the buyer to make energy efficient updates to their home by rolling the extra upgrade costs into their FHA loan.
  • National Homebuyers Fund/CHF Platinum Grant – This program helps low to moderate income homebuyers (whose income doesn’t exceed 140% of the median income where the property is located) by providing a grant for five percent of the closing costs on their first home.
  • Extra Credit Teacher Home Purchasing Program (ECTP) – This program offers between $7,000 and $15,000 down payment assistance for teachers and school administrators.

The loans listed above are offered by the federal government and are available for a first-time home buyer in any part of the country. This is not a comprehensive list of the federal programs, and there are also state-specific programs that aid first time home buyers. It’s important to know about all the options for financing in your state before deciding what type of loan you will commit to.