The cost of buying your first home buyer can seem high at first but thankfully, several loan programs help you obtain a low down payment and closing costs, including tax credits and government-sponsored home buyer educational programs. They are not all alike, though, so let’s look at the main types of assistance.
A home loan backed by the federal government, like FHA, can help first-time home buyers purchase their house with a low down payment. When you buy a house, you may take advantage of government programs from the federal, state, and local levels. Anyone who is a citizen or legal resident of the United States can participate in federal programs. If you are eligible for federal aid, you do not have to reside in a particular state or city. First time home buyers may participate in several government initiatives, including:
- Homebuyer Education. If you can’t decide where to begin your search for a house, consider using online educational programs to learn about mortgage opportunities and how to start buying a home. Try looking for free or low-cost resources that teach about real estate loans and the home buying process.
- Closing Costs Assistance. Government and commercial programs can help you cover closing costs. After a loan is approved, additional fees are often due, which add up to three to six percent of the loan amount. Some buyers may be able to get aid in paying those fees; some sellers may also pay for attorney expenses, real estate taxes, and title insurance. Some sellers may even pay for points or other closing costs when negotiated in the offer.
- Federal Insured Loans. Bad credit? Low down payment? Not a problem for government-backed loans. Loans backed by the government are less risky for lenders because the government guarantees them in case of default and covers the loan, alleviating the risk from the lender. Also, with lesser risk lenders can offer borrowers better rates. Government-backed loans are also made more to borrowers who might not qualify for other loans.
FHA loans, USDA loans, and VA loans are all government-backed lending choices, but each loan has different requirements that you must meet. You should know these requirements before applying for any government-backed lending programs.
Down Payment Assistance (DPA)
Purchasing a home usually requires a down payment. You may be eligible for a down payment assistance program that you can use to reduce the amount of your initial down payment or pay it off entirely. These programs have requirements, so you will have to meet the standards.
- Loans from the DPA. Are you worried that you do not have enough money for a down payment? You may also be eligible for a few specialized loan programs to make a down payment of as little money as possible. Second mortgages, delayed payment loans, and loans that have been forgiven are some loan alternatives. If you have an outstanding second mortgage, you will still be required to pay it off with your first mortgage. Additionally, if you move, sell the house, refinance or pay off the primary mortgage before the specified number of years has elapsed, you will be required to repay the loan.
- The DPA Grants. If you are buying a home for the first time, you may be eligible for a grant from the government that does not have to be repaid. Your state or local government can help you determine whether there are any programs for people with low incomes and low credit scores.
Your Team is Here For You at McGowan Mortgages
When getting your first home, a government-backed loan can be a perfect fit. It helps you get into your first home, especially when you don’t have a down payment and the money to cover closing costs. Government-backed loans are also easier to get than loans without government support. Are you searching for home loans in Kansas City? McGowan Mortgages’ home loan specialists ensure that your investment, home purchase, or refinancing experience in Missouri and beyond is exceptional. Call us today at (816) 631-9687.
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