First-time homebuyer programs are designed to make it easier for some people to purchase a home. Since these borrowers aren’t selling an existing property, they may not be able to afford a 20% down payment, closing costs, or a market-based interest rate. Certain programs are also designed to help low-income buyers or those with poor credit scores. In any event, borrowers may be able to save money if they qualify for a program.
The name can be a bit misleading; these programs are not necessarily restricted to just first-time homebuyers. You may be able to qualify if you haven’t owned a home for a certain number of years. If you sold your home or it was foreclosed on years ago, you may be eligible for some first-time homebuyer programs. In addition, some programs are catered to those working in specific fields such as law enforcement, education, and the military.
What are the Benefits of First-Time Homebuyer Programs?
There are many potential benefits first-time homebuyer programs can offer, including:
Grants & Assistance with Closing Costs: To help you secure a new home, some loans will place a cap on how much is charged for closing costs or offer cash toward your down payment.
Savings on Interest: Some organizations will help borrowers qualify for loans with lower interest rates.
Deferred Payments: Some loans won’t charge interest until the homeowner pays off their mortgage or sells their home.
Down Payment Assistance: While the ideal down payment is 20%, some loans will allow a smaller amount or none at all.
Loan Forgiveness: A portion of the debt will be canceled for homeowners who stay in their home for a certain period.
How Do First-Time Homebuyer Programs Differ by State?
First-time homebuyer programs vary from state-to-state in terms of their levels of buyer assistance. Each state will also offer a different number of programs. To qualify, borrowers must usually attend a homebuyer education course.
Take into consideration that some states will have targeted funds or special programs aimed at specific locations within the state. To learn more about additional help that may be available, visit your state’s housing agency website.