Home loan options for first-time borrowers from Green Sprout experts
Buying your first home can be very stressful, but Green Sprout knows this. That’s why Green Sprout experts have researched the best mortgage options for first-time borrowers. See below for details.
Who qualifies as a first-time homebuyer?
First-time homebuyers are not homeowners, investors, or remortgaging their previous homes. Therefore, in general, you should not have previously owned a home or owned property to sell.
How much do banks lend to first-time buyers?
If you are a first-time buyer, you can find many lenders that will allow you to borrow up to 4 or 4.5 times your annual income. In rare cases, we may offer 5 to 7 times the amount.
Mortgage options available to first-time buyers
Federal Housing Administration (FHA) Loans
The Federal Housing Administration is easy to qualify and has a low down payment. Down payment is as low as 3.5%, along with low upfront loan costs and moderate credit requirements. Therefore, it is ideal for first-time buyers.
However, this depends on your credit score. The minimum credit score for FHA loans is 500-580. Those with a credit score of 580 and above are eligible to pay a subsidized her 3.5% down payment only, while those between 500 and 579 may be required to pay up to 10% in down payment.
However, all borrowers are required to pay a mortgage insurance premium to protect the lender if the borrower is unable to repay for any reason.
The federal government does not guarantee these types of loans. They have many strict requirements and this makes it difficult to qualify.
They require a higher credit score, a lower debt-to-income ratio, the possibility of private mortgage insurance, and a larger down payment, but they cost less than federally-backed loans.
United States Department of Agriculture (USDA) Loan
This loan requires no down payment and offers 100% financing. This loan is for those looking to buy a home in designated rural areas. Loans do not require private mortgage insurance, but are subject to a 1% upfront financing fee and a 0.35% annual fee at the closing point.
US Department of Veterans Affairs (VA) Loans
of VA loan We do not offer loans to everyone, but we do guarantee loans from qualified lenders. The loan is intended to help active or retired veterans or their spouses obtain a mortgage on favorable terms. They are usually easy to qualify.
Special program for first-time buyers
Mepersonal retirement account
green sprout All first-time home buyers can withdraw up to $10,000 from their Individual Retirement Account (IRA) without having to pay early withdrawal penalties. However, the money withdrawn is subject to income tax.
Ready Buyer Program
The Federal National Mortgage Association has a program called Ready Buyer that offers up to 3% assistance for closing costs when buying a property (foreclosed property owned by Fannie Mae). This is a special project for first-time buyers.
Down payment assistance program
Down payment assistance program Available in select states for first-time buyers. The program is primarily aimed at civil servants and low-income earners.
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