As a first-time homebuyer, it can be intimidating to understand all available mortgage options. Finding the right mortgage can significantly affect how much you pay over the duration of the loan and the amount of cash you need to close the loan. Fortunately, there are a variety of mortgage options available to first-time homebuyers. Understanding the different types of mortgages is essential, so you can make an informed decision regarding which loan is best for you.
3 Mortgage Options for First-Time Homebuyers
- USDA Loans. The USDA loan is a popular mortgage option for first-time homebuyers. It is a government-backed loan program administered by the U.S. Department of Agriculture. It’s designed to help low- and moderate-income households purchase homes in rural and suburban areas. The USDA loan program offers several benefits to first-time homebuyers. First, it is a zero-down mortgage, meaning you don’t really need to put any money down on a loan. This allows you to purchase a home with no money out of pocket. Second, the USDA loan has a low-interest rate, which makes it easier to afford your monthly mortgage payments. Finally, the USDA offers flexible credit requirements, making it easier for first-time homebuyers to qualify. For you to be eligible for a USDA loan, you must meet certain eligibility requirements. First, you must be a U.S. citizen or permanent resident. Second, you must have a steady income, which can be from employment, Social Security, child support, or other sources. Third, you must purchase a home in an eligible rural or suburban area. Finally, your total household income mustn’t exceed the income limit for your area.
- FHA Loans. FHA loans are a type of loan backed by the Federal Housing Administration that can help make it easier to buy a home. They can be an attractive option for first-time homebuyers because they offer lower down payment requirements and more lenient credit score requirements than conventional loans. FHA loans are designed to help people with lower incomes, or those with less cash available for a down payment, purchase a home. The FHA insures the loan, meaning the lender can feel more secure when offering a loan to a borrower who may not qualify for a conventional loan. For you to be eligible for an FHA loan, you must meet certain requirements, such as having a minimum credit score and providing proof of income. The main benefit of an FHA loan is the low down payment requirement. FHA loans require just 3.5 percent of the purchase price as a down payment, making them an excellent option for first-time homebuyers who may not have the cash available for a larger down payment. Additionally, FHA loans are more flexible when it comes to credit score requirements and are often more forgiving of lower credit scores than conventional loans.
- VA Loans. VA loans are one of the best mortgage options for first-time homebuyers. VA loans are home loans backed by the U.S. Department of Veterans Affairs (VA). They are available to active-duty service members, veterans, and certain members of the National Guard and Reserves. VA loans are an attractive option for first-time homebuyers because they offer low down payments, no mortgage insurance, and competitive interest rates. One of the significant advantages of VA loans is that they do not require a down payment as long as the purchase price is within the VA loan limit. VA loans also come with no mortgage insurance, which can save borrowers thousands of dollars over the duration of the loan. VA loans also limit the amount of closing costs charged to the borrower and offer competitive interest rates.
Final Thoughts
First-time homebuyers have a wide array of mortgage options, depending on their financial situation and preferences. Ultimately, the best mortgage option for first-time homebuyers is one that fits their individual needs and budget.
Get In Touch With Your Mortgage Specialist Today!
Finance your first home with the help of MidAmerica Bancorp, Inc. We are a mortgage company that offers a range of mortgages for first-time and returning homebuyers with low down payment options. We are here to make the mortgage application process fast and easy. Get in touch with us today at (708) 237-4050!
