With so many home loan options, it can be very confusing for first time home buyers. We are here to help bring some clarity.
Buying your first home is a huge purchase. In fact, it may be the largest transaction you will ever make. Making sure you get the right mortgage for your situation is crucial. There are quite a few financing options for first time buyers and it all can seem overwhelming. It is very important for you to take as much time as you need to research loan financing to help save you time and money.
Doing some research into obtaining a mortgage where you live and whether your local government offers any home loan programs to buyers could mean financial assistance for you. Depending on your financial circumstances it is possible you may be eligible for an FHA, VA or other government backed loan.
Conventional Home Loan
Conventional loans are a very common type of loan that are not backed by the federal government. These loans can be harder to qualify for because there are stricter requirements which include lower income to debt ratios a higher credit score and a bigger down payment. The benefit of a conventional loan is there usually less expensive compared to loans that are backed by the federal government.
Conventional loans can be broken down into two categories: conforming loans or nonconforming loans.
Conforming Home Loans
Conforming loans comply with government set guidelines such as limits set by organizations such as Fannie Mae and Freddie Mac. Lenders such as these and others will often buy and package these home loans and then offer them for sale on a secondary market. Mortgages sold on the secondary market are required to meet guidelines for them to be classified as conforming loans.
In 2021, the maximum conforming loan limit is $548,250. Any loan issued for a larger amount is called a jumbo loan. Jumbo loans will usually have a higher interest rate due to the fact they carry more risk since the loan amount is for more money.
Non-Conforming Home Loan
Non-conforming loans will have their own guidelines set by the financial institution backing the loan. Government regulations do not allow non-conforming loans to be made for sale on the secondary market.
Federal Housing Administration (FHA) Home Loans
FHA loans are a great choice for first time buyers. FHA loans have been helping consumers become homeowners since 1934. The FHA which is part of the US Department of Housing and Urban Development, insurers your loan so that your lender can offer you a better deal. Some of the perks include low down payments, low closing costs, and easy credit qualifying.
If you are buying your first home the FHA might be just what you need. The required down payment for your new home mortgage can be as low as 3.5% of the purchase price. The FHA even includes incentives for making your home energy efficient through an FHA energy efficient mortgage.
Amerifund.com is an approved FHA lender!
Veteran Affairs (VA) Home Loan
If you are an active duty servicemember, a veteran, or an eligible surviving spouse you may very well be eligible for a VA loan. VA loans are home loans that are backed by the US Department of veteran affairs. The loans themselves are provided by private lenders, like Amerifund, but the VA guarantees a portion of the loan, which enables the borrower to obtain a loan more easily and with more favorable terms. It is the VA’s stated goal to serve veterans by helping them secure an advantageous mortgage.
Some VA loan benefits include a competitive interest rate, often not requiring a down payment, or even private mortgage insurance. Cash out refinance loans hello veterans to take some cash out of your home equity and then use it towards financial concerns such as paying off debt or making home improvements. Streamline refinance loan, also known as the Interest Rate Reduction Refinance Loan, can help veterans gain a lower interest rate through refinancing an existing VA loan.
VA loans can be obtained through a lender of your choice once you obtain a Certificate of Eligibility (COE). You can obtain a COE through eBenefits, by mail, and often through your lender.
Amerifund.com is an approved VA lender!
USDA Home Loan
A USDA home loan is a loan guaranteed by the US Department of Agriculture. This program assists approved lenders in providing low to moderate income households the ability to purchase a home in certain eligible rural areas. Eligible homebuyers may obtain financing or purchasing, building, improving or even relocating a dwelling in an eligible rural area. The USDA loan program gives a 90% loan note guarantee with the intention of reducing the risk of extending loans 2 rural home buyers. What this means for first time homebuyers is no money down for those that qualify. For more information and to check a specific address follow this link to USDA’s Eligibility Site.
Other State and Local Programs
If you need extra help with your down payment, there may be a program available to you from your state or local government. Find a program near you.
Amerifund Home Loans has helped hundreds of first-time home buyers find the perfect home loan for their financial situation. We are highly rated on Google and Yelp due to our top notch customer service. Our goal is to educate you, the first time homebuyer, so that you feel comfortable with every step of home finance process.
Whether you are curious about what you can afford or ready to purchase your first home, we’ve made it easy.