First Time Home Buyers Top Financing Alternatives

Where do first time home buyers go for financing? The financing selections for first time home buyers are abundant.

However in today’s economic environment, a real estate buyer must typically have at least 3% to put down and excellent credit to get approved for financing. There are many instances today where buyers with even 20% or more to put down cannot get financing because they have less-than-stellar credit scores or their income has decreased over the past 2 years.

The good news is that most states offer educational courses that are low-cost or even free! These courses teach first time buyers about their choices for down payment help and general financing alternatives. A buyer’s agent will have enough knowledge of these programs to point a buyer in the right direction .

There are also low-income buying programs like Fannie Mae, Freddie Mac, HUD, FHA, and RHA.

Fannie Mae stands for Federal National Mortgage Assistance. In 1938, Congress created Fannie Mae. This program renders financial services and other choices for the families who cannot qualify for a home loan due to low- or mid-income levels .

Freddie Mac is the Federal Home Loan Mortgage Corporation. Congress chartered this program in 1970 as a way to fund the mortgage lenders. Freddie Mac purchases residential mortgage loans and resells them to investors on Wall Street. This increases the opportunity and ability of being able to afford home loans.

HUD is the US Department of Housing and Urban Development,. By creating more stable communities and affordable housing, they believe the rate of homeownership will raise . Their Good Neighbor Next Door program gives teachers, firefighters, emergency responders, and law enforcement workers a 50% discount of the listed price of a home. Several agencies are part of HUD, and they assist families who have lower incomes to purchase or renovate homes.

Many buyer’s agents specialize in working with people buying HUD homes. First time buyers are urged by HUD to use exclusive buyer agents. “If you want someone to represent only your interests, consider hiring an “exclusive buyer’s agent,” who will be working for you,” this quote came from HUD in their In Shopping For Your Home Loan – HUD’s Settlement Cost Booklet.

The FHA insured loan is a Federal Housing Administration mortage insurance backed loan that has been afforded by FHA-approved lenders. This type of home loan is considered federal assistance.

Throughout their existence this program has given assistance to low-income buyers who would otherwise not be able to afford a loan. This program was started during the Great Depression in the 30s as a source of decent insurance when foreclosures and defaults on loans were high. Presently, it is used to assist people who are not able to afford traditional down payments and do not qualify for private mortgage insurance.

The RHA (Rural Housing Authority) makes direct loans to buyers, provides grants, and guarantee regular commercial loans for home buyers in rural areas. With a purpose of making rural America a more desirable place to reside, the USDA Rural Development program created this.

The most popular first time home buyer financing options have been listed above but the list goes on and on for first time home buyer financing! Using a professional like a buyer’s agent cannot be stressed enough to guide buyers through the process and connect them with resources. Buyer’s can find a buyer’s agent in their area who offers free consultations.