Different Types of Home Loans Available for First-Time Buyers
First time home buyers tend to be younger, settling into a career, and often starting a family. Their annual income ranges from just over $ 52, 000 for a single female to about $ 100,000. First-time buyers can be single, married with children and couples living together.
Their biggest challenge is to find the cash for the down payment on their home. The second problem is to locate a lender willing to consider a loan to a first-time home buyer.
A good first-time buyer loan should have a low down payment, no mortgage insurance, and a low interest rate.
Standard down payments range from 5 to 20 percent. Down payments under 20% generally require mortgage insurance.
New home buyers can choose from many mortgage plans.
Government assisted or sponsored programs are among the best.
require only about 3 percent down payment. Credit requirements are relaxed. A credit score around 640 or less may suffice. But you must pay mortgage insurance.
Veterans and their spouses are eligible for special loans through the Veterans Administration with 100 percent financing. And no mortgage insurance. Hard to beat.
If you live in a rural area and have a steady low to moderate income, apply for a USDA loan through the local rural Housing Service.
Conventional loans favor first-time buyers.
Adjustable Rate Mortgage (ARM)
has a low-interest rate for up to five years. Then they adjust to higher rates. If you keep your house for five years or less, they are a good solution.
Conventional insured loans
with a five percent downpayment are competitive with FHA loans. Cancel the mortgage insurance when you reach 20 equity in your home.