First Time Homebuyer Programs with Downpayment Help

Buying a home is for many the largest purchase of their lives. It can be challenging to make such large commitment. This difficult is increase for many when it comes to the funds required to secure a down payment. The good news is that there are several down payment programs specifically available for first time buyers that dramatically help ease the burden of buying your first home.

FHA Loans are the most common way for first time homebuyers to secure their first home purchase. FHA loans are loans that are insured by the Federal Housing Administration and typically require a down payment equal to 3.5% of the homes purchase price. Fortunately, many lenders who originate these loans have creative solutions and their own programs designed to offset this 3.5% requirement.

In addition to FHA loans, there are also programs for Veterans under VA Loan guidelines, in addition to USDA rural home loans and more that have similar programs with low or no down payment requirements.

Overcoming the Down Payment Hurdle

In a perfect world, buyers would have 20% of the homes purchase price to use as a down payment, but as housing affordability has declined, buyers, sellers, and lenders have all been forced to find creative solutions to overcome this hurdle. For starters, USDA and VA loans don’t require a down payment. The trouble with these 2 loan types is that they are targeted to veterans and those residing in rural communities.

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Private first-time home buyer programs

That’s where private first-time home buyer programs can provide assistance. Many private mortgage lenders offer various programs to help potential buyers close the down payment gap. These programs are often provided directly from the mortgage company. Another great option to consider is grants offered by private and public organizations for the specific purpose of helping first-time buyers overcome the down payment hurdle. We have put together a nationwide list of down payment grant programs here. We also have a nationwide list of additional homebuying programs here.

Final Thoughts

The down payment assistance programs offered in our nationwide list typically look at 2 factors, your income, and your credit. While these programs are designed for those with lower incomes and below average credit, they do need to ensure your ability to pay the actual mortgage. If you are unsure of your current credit score you can get a free copy of your score here. Regarding income, a general rule of thumb is that a mortgage should only use about 30-40% of after-tax income. For example, if your income is 52k annually, or 4k/mon that would allow for a mortgage payment of $1600/mon.