Best Home Loans For First Time Home Buyers

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Best Home Loans For First Time Home Buyers

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Misconceptions That Hinder People From Getting An Fha Loan — The Asa Team

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If you’re a first-time homebuyer struggling with the credit and down payment requirements that traditionally come with a mortgage, these home loans for first-time buyers can help you overcome those hurdles and ultimately your Can help you get the keys to your house. . .

Note: The definition of a first-time home buyer varies by lender, but most use the U.S. Department of Housing and Urban Development’s definition, which includes someone who has not owned a primary residence in the past three years. . In addition, many of the loan programs listed here allow non-first-time home buyers to apply.

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All of the mortgages listed here have features that make them affordable for first-time home buyers and other cash-strapped buyers. All allow low or no down payments, and many do not require private mortgage insurance (PMI).

PMI is usually required on mortgages of less than 20%. PMI is a cost added to your monthly mortgage payment that helps compensate the lender for the risk of allowing a lower payment.

Many of these mortgages also have flexible credit requirements, such as allowing borrowers to use non-traditional credit to qualify. Keep in mind that some lenders will only let you do this if you don’t have a traditional credit score. If you have a low score, you still need to work to improve it before you qualify for a mortgage.

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Frequently Asked Questions About Fha Home Loans

First-time home buyers are often attracted to government-backed mortgages such as FHA loans because of less stringent credit requirements and lower down payments. First-time buyers may prefer traditional mortgages, as they allow as little as a 3% down payment.

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Your state or local housing authority may offer some type of down payment assistance, and there are many nonprofit programs that help buyers with down payments. You can search online or contact your state’s housing authority to see what’s available in your area.

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Apply for pre-approval with three or four lenders to determine the loan amount, terms and rates available to you. Once you are pre-approved, contact a real estate agent to start looking for a home. You may decide to contact an agent first and get recommendations for good lenders in your area. The professionals who work with you will help guide you through the process.

How much should you keep at home? A chevron icon indicates an extended section or menu, or sometimes previous/next navigation options.

The default answer is 20%, but most people don’t lower it. Conventional mortgages allow a down payment of less than 3%, while FHA borrowers require a minimum of 3.5%. If you qualify for a USDA or VA mortgage, you don’t have to make a down payment.

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First-time home buyers may not be subject to different credit score guidelines than first-time borrowers, but some programs may be suitable for borrowers with different requirements. A score of at least 620 is usually required if you’re trying to get a loan, although you can get as high as 580 or 500.

Bank of America’s Community Affordable Loan Solution is a very affordable option for borrowers who qualify for a mortgage, because you don’t need to bring any cash to closing.

Flexible credit requirements: no minimum credit score; Use rent, utility, phone, or auto insurance payments to create an on-time payment history.

What to look for: According to the bank’s press release, the mortgage is only available in “select markets,” including some historically black and Hispanic neighborhoods in Charlotte, Dallas, Detroit, Los Angeles and Miami. To qualify, you need to meet income thresholds and complete a homebuyer certification course.

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Bank of America Dream Loans require a minimum of 3% down and support a down payment.

If your student loans have prevented you from qualifying in the past, you may be in luck with this loan program; Bank of America has said it will work with borrowers on income-based payment plans.

This loan comes with up to $10,000 in assistance that can be used for down payments, closing costs or other expenses related to your home purchase.

Flexible credit requirements: Accept non-traditional credit if you don’t have a good score. If you have a credit score, it must be at least 640 to qualify. A debt-to-income ratio of less than 43% is required.

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What to look for: This mortgage is available in 25 states. You are required to contribute at least $1,000 of your own funds at closing. There are income restrictions.

PNC Bank’s PNC Community Mortgage is another one of our favorite options for borrowers who can make smaller payments.

In addition to low-PMI mortgages, PNC Bank offers a $5,000 closing cost subsidy for borrowers who meet income thresholds or live in low- to moderate-income areas.

Flexible credit requirements: PNC Bank said this loan has “relaxed” requirements and many borrowers have more favorable terms for PNC Community Mortgages than conventional loans.

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The Navy Federal Home Buyer’s Choice Union Loan is a great option for federal Navy members who don’t qualify for a mortgage backed by the US Department of Veterans Affairs, because this loan works like a VA loan, with no down payment and no PMI. J.

Flexible credit requirements: There are no specific credit requirements for this loan, but Navy Federal Online notes that it considers both your credit score and your banking history with this credit union.

What to look for: You need to be a Navy Federal Credit Union member to get a mortgage with this lender. Membership is only available to veterans, members of the Armed Forces, Department of Defense, or National Guard, or their immediate family members.

The Wells Fargo Dream. plan Home mortgages are one of the more expensive mortgages on our list, thanks to the 3% down payment and required PMI. But it’s still an overall affordable option for borrowers trying to cash in, and the $5,000 cost of credit is a worthwhile perk.

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This mortgage can be combined with Wells Fargo Dream. plan Home loan closing costs. With this line of credit, borrowers can get up to $5,000 toward closing costs. Credit is only available in certain areas.

What to look for: Unlike most mortgages on this list, this mortgage requires PMI, which may make it more expensive than your first-time home buyer loan options. There are income restrictions.

Northpointe Bank’s 100% Northpointe mortgage is an ideal option for borrowers with a good credit score, but it’s not as flexible as other mortgage lenders on this list.

Northpoint has another unique 0% down product, called EquityBuilder. With this loan, use your savings as a down payment and replace it with a low-rate or short-term loan.

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What to look for: This mortgage is available in 23 states. There is no income restriction to qualify.

Citibank’s HomeRun Mortgage is a great option for borrowers who want to use non-traditional credit, but the high down payment requirements that come with it may not be worth it. Citibank’s closing cost assistance is on the higher end

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