Looking for more mortgage tips and advice? Learn more from Fidelity Everyone who applies for a mortgage is required to prove their financial and personal history through a series o... read more
Buying your first home can be a very nerve-wracking proposition, especially when it comes to the financing aspect of the process. Even if you have money set aside for a down payment, you still may feel like the dream is just out of reach. However, it doesn’t have to be, thanks in part to an array of first-time home buyer programs that could be just what you need to get a deal done. Let’s look at a few options that could help you secure the keys to your very own home sweet home.
Georgia Dream Homeownership Program
Specific to our state, the Georgia Dream Homeownership Program was designed specifically for low- and moderate-income residents. The program works through the Georgia Department of Community Affairs, which acts as a secondary market for lenders that want to offer affordable mortgage products to eligible home buyers. If you’re a first-time home buyer with a minimum middle credit score of 640, then the program might be ideal for you. Of course, there are stipulations; for instance, if you choose a home in one of the main metro counties, the purchase price cannot exceed $250,000. What’s more, Georgia Dream borrowers must receive home buyer education and invest at least $1,000 towards a down payment. However, when you participate in the program, you have access to down payment assistance options. To get more information, visit GADream.com.
If you have not set aside an adequate amount of money in a savings account for a down payment, then an FHA loan may be a good option for you. Loans secured through this program are backed by the Federal Housing Administration (FHA) and typically require a 3.5 percent down payment (which is quite small in comparison to a standard 20 percent down payment). You must have a credit score of 580 to qualify; however, if your score is closer to 500, then you can still be eligible, but you’ll need to be prepared to make a 10 percent down payment. What’s more, regardless of your score, your loan will require the purchase of mortgage insurance. Many first-time home buyers look to FHA loans because they are fairly easy to qualify for; according to The Lenders Network, 46 percent of first-time home buyers in 2017 used FHA loans. To apply, you’ll have to find a private lender that offers mortgages backed by the FHA. To learn more, visit fha.com.
Fannie Mae and Freddie Mac
You may be familiar with these names but don’t really know much about them. Fannie Mae and Freddie Mac are government-sponsored entities that purchase home loans in the United States and package them on the secondary mortgage market in a way that makes them accessible to low- and middle-income home buyers. As a first-time home buyer, you would not deal directly with Fannie Mae or Freddie Mac; instead, you would work with a local bank or a mortgage lender to secure one of their loans. Home buyer education is a requirement in return for a low down payment and secure, low interest rates on the loan. There are different first-time home buyer loan options through these entities; for instance, the HomeReady® loan from Fannie Mae requires a down payment as low as three percent for someone who has a credit score of at least 620, while a Freddie Mac mortgage also requires a three percent down payment, as it covers 97 percent of the loan. To learn more, visit fanniemae.com or freddiemac.com.
For service members, veterans and surviving spouses, a VA loan can be a welcome opportunity. Guaranteed by the U.S. Department of Veterans Affairs, VA loans are provided by private lenders that, with the backing of the VA, can offer competitive interest rates and, in many cases, no down payment requirements. Within the program, there are different home loan benefits, and your eligibility for those benefits is determined by your length of service or service commitment, duty status and character of service. You can get more information about eligibility and how to apply at benefits.va.gov/homeloans.