Buying your first home can be a pretty big step. However, you’ll find that there are lots of first-time homebuyer resources available to help you understand all of the terms and details you’ll encounter. There’s also a great deal of financial assistance available if this is your first home purchase. By the way, the phrase “first-time homebuyer” doesn’t always mean this is the first time you’re buying a house. In some cases, people who haven’t owned a home in three years or more are looked upon as first-time homebuyers too.
First-Time Homebuyer Loans and Financing
A vast array of loan programs can help you meet down payment and closing costs as a first-time homebuyer. The government sponsors some of these; others are administered by charitable organizations. You’ll also find local and federal tax credits of which you can avail yourself, along with educational programs to help you make the best possible choices.
Down Payment Assistance Loans typically come in the form of low- and no-interest financing. How they can be used and paid back varies according to the nature of the program. Down payment loans can take the form of second mortgages, deferred payment loans and forgivable loans.
Second mortgage down payment loans are usually repaid in conjunction with your primary home loan/mortgage. Deferred down payment loans need to be repaid when you move, sell the home, refinance it, or pay off the primary mortgage. Forgivable down payment loans typically have a time horizon you must meet to qualify for forgiveness. You’ll be required to repay them in full if you take any of the actions listed above before that horizon is met.
Down Payment Assistance Grants do not have to be repaid, however the qualifying requirements can vary, so it’s important to understand the details surrounding them. These are generally offered by state and local government entities.
Federal Government Backed Loans sometimes have no down payment requirements at all.
Tax Deductions and Credits, available to homebuyers in general, can also be of service to first- time homebuyers. These include deductions for mortgage interest on both federal and state taxes.
Closing Cost Assistance is also offered by government and charitable organizations. These can average between 2% and 6% of the cost of a home loan. This money is offered in the form of both grants and loans as well. In some cases, the seller of the home can help with these costs through what’s known in the real estate industry as seller concessions. Sellers can also sometimes be called upon to help with getting you a better interest rate and covering certain taxes.
First-Time Home Buyer Education
Many of these classes are free, or affordably priced, and can be especially helpful when it comes to learning how mortgages work. They also offer information about the options you have for financing as well as tips for ensuring your loan applications are complete. You’ll find lists of the courses available in your area at the U.S. Department of Housing and Urban Development website.
In Summary
There exists a plethora of grants, loans, financial help, and educational opportunities to help first time homebuyers secure a new home. These include down payment assistance, help with closing costs and tax credits.
These opportunities are provided by federal, state and local government organizations, as well as charities, assuming you meet income qualifications. And again, “first-time homebuyer” doesn’t always have to mean it’s your first home purchase. You’ll likely qualify if you haven’t owned property within the past three years.
Specific information on all of these first time homebuyer assistance programs can be found at the website maintained by the U.S. Department of Housing and Urban Development.
