Learn About First-Time Homebuyer Benefits You Should Know About

Buying your first home is an exciting adventure. It can also be a costly one. If you’re part of a low-income household, you might worry that you’ll never be able to afford a home of your own.

Aside from having a specific income and the ability to put down a down payment, lenders usually require potential homebuyers to meet specific credit score requirements to take out a mortgage loan. For many, these requirements can seem overwhelming.

However, applicants who are not eligible for traditional mortgages may still be eligible for certain grant or loan options. Some of the best versions of these programs are offered through the government.

By understanding the government housing grants and loan programs that you could apply for, you can learn if purchasing a home is the right decision for you. You can also learn about potential benefits you may be eligible to receive.

Do I qualify for first-time homebuyer benefits?

Many government programs to help new homebuyers with buying a new home are funded by the Department of Housing and Urban Development (HUD).

While these government programs need potential homebuyers to meet qualifications such as income, down payment and credit score, it is often the case that these requirements are less strict than they would be if individuals were applying for a traditional mortgage. This means more people can usually qualify for benefits.

What types of government aid is available to first-time homebuyers?

First-time homebuyers have many assistance options to buy their home. For instance, HUD sells homes that are typically less than their market value. Families with limited incomes may be eligible to purchase one of these properties.

Furthermore, the Federal Housing Administration (FHA), an agency that is part of HUD, offers its own loan program you could apply for. The loan program insures mortgage loans to qualifying first-time homebuyers so individuals can be eligible for a mortgage.

Additionally, the Internal Revenue Service (IRS) provides specific tax breaks to individuals who are buying homes for the first time. The IRS offers this tax break for a certain period of time after individuals buy a home.

This benefit can help you save more money in the long run since it lasts a few years after purchase. Lastly, you can be eligible for extra aid through local and state programs available where you live. Be sure to check with your local government to learn about the different options that could be available to you in your area.

Learn About FHA Loan Programs

If you want to buy a home but cannot meet the requirements for a traditional mortgage, it’s important that you familiarize yourself with the FHA loan program. The FHA loan is a kind of loan that you can get from a mortgage broker or lender. It’s backed by the federal government.

This kind of insurance can minimize or remove the risk for the lender, which means that the borrower is usually able to have more flexible borrowing terms. This means the lender will accept applicants with lower:

  • Credit scores.
  • Income levels.
  • Down payment amounts.

For instance, this kind of loan can help lower the qualifications for down payments to as low as 3.5 percent for the total buying price of the home.

If you would like to apply for an FHA loan in order to buy your first home, then you need to contact a lender that is FHA-approved. The lender will have to know if you as a buyer are qualified to participate in the FHA loan. You don’t apply for a loan through the FHA.

Additionally, the lender will give you the terms for the loan that you may be offered for the program. However, before you speak with a lender, you need to make sure you qualify for this type of loan.

About FHA Loans

Learn About the HUD’s Good Neighbor Next Door Program

HUD gives generous discounts to eligible homebuyers who want to buy a home from them. These HUD homes are properties that were foreclosed on and were also FHA insured. If the HUD loan obtains multiple offers, the HUD will have a lottery to decide who can buy the home.

Although the U.S. Department of Housing and Urban Development will price these homes way below their market value, there are applicants that can be eligible for at most for 50 percent off of the buying price for the house. This is only possible through the Good Neighbor Next Door Program.

To qualify for this program, you need to:

  • Be a law enforcement officer, firefighter, teacher or emergency medical technician (EMT).
  • Agree to live in the property for at least 36 months.

To submit an application for this program, you need to call a lender that is HUD-approved and can sell HUD homes.

Veterans: Learn About Extra Mortgage Aid and Loans

If you are a U.S. veteran buying your first home, you may have additional types of financial assistance at your disposal. The U.S. Department of Veteran Affairs (VA) provides many loan programs that can fund the purchase or construction of a home. You may also be eligible to refinance a home with a VA loan for better interest rates.

The requirements for a VA home loan will vary, but the requirements are typically related to discharge status, service time, credit score and income limit. Like an FHA loan, the credit score and income requirement if usually more lenient than it would be with a traditional loan.

You must apply for a Certification of Eligibility (CoE) to buy a home with a VA loan. These applications can be completed online, by going to a local VA office or by seeing a VA-approved lender.

Furthermore, veterans may be able to access financial assistance to help them afford to repair their loans. This is available through programs such as the Specially Adapted Housing (SAH) grant or the Special Housing Adaptation (SHA) grant. These types of grants are available to veterans who have disabilities that are related to their service in the armed forces.

If you have questions about whether you qualify for one of these grants, you can talk to a VA representative near you.