FHA - Many times when we hear about first time buyer programs, what we are really talking about is an FHA loan. This type of loan is guaranteed by the Federal Housing Administration. You still have to qualify to obtain financing, but FHA can be more forgiving than conventional loan programs. The biggest benefit of using FHA financing is that the down payment can be as little as 3.5%, while a conventional loan may require you to pay up to 20% of the purchase price as a down payment plus closing costs. FHA will also allow you to ask the seller to make a contribution toward your closing costs. You may also be able to accept a gift from a family member toward your closing costs.
Check out this brief video about FHA loans courtesy of Geoffrey Archer with OnQ Financial
Down Payment Assistance - There are also other assistance programs that actually help first time home buyers with the down payment. These are typically down payment assistance programs operated by local, state and federal governments. These programs may require you to attend home buyer classes, and may be strictly limited based on the economic status of the buyer. This can make them difficult to obtain, because you have to make enough money to qualify for the home loan. However, you cannot make too much money, or you may not qualify for the down payment assistance. These programs are also very under-funded and often do not have funds available to offer assistance. Many bank owned properties will not work with these types of assistance programs, because of the lack of funding and frequent delays.
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