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FHA First Time Home Buyer
|FHA First Time Home Buyer refers to the mortgage insurance programs FHA has put in place for the first time home buyers. A borrower may qualify for one of the several homebuying programs that the local agencies representing HUD and the respective state government offers in a state.
Each of these programs may have a separate set of guidelines regarding aspects like borrower’s qualifications, loan limits, down payment amount, interest rates and tax credit. The definition of what constitutes a first-time homebuyer can be had from HUD HOC Reference Guide.
FHA First Time Home Buyer Program
The Federal Housing Administration does not forward home loans, but provides insurance coverage for the lenders to make loans to those who find it difficult to qualify for conventional loan. People buying home for the first time often do not have the required sum of money to put down at settlement or pay for closing costs. Moreover, it is also not possible for them to maintain a credit history that is acceptable to a lender offering conventional loans. FHA loan programs are meant to help such kind of borrowers.
There may be different programs running in different states and you may find one that is perfectly suitable to you. You can contact a HUD-funded housing counseling agency operating in your area to know your options. You can also visit the local office of housing and community development for further details.
One of the most popular programs for first time home buyers seeking FHA assistance could be 203(b) mortgage insurance. This program requires just a little over 3 percent down payment (sometimes even less than 3%) and offers up to 96.5 percent financing. There is another program known as 203(k), which is meant for buying a house that needs repairs. The loan amount under the program carries the purchase price as well as the estimated cost of repair and renovation works.
FHA First Time Home Buyer Qualifications
FHA first time home buyer qualifications vary according to the program being offered in your state. The first criterion to evaluate the eligibility of a borrower is usually the credit score, which must be over 580.
However, there might be some opportunities available for people having a lower credit score. Moreover, the property must be a one-to-four unit structure and the buyer must intend to live in it. In other words, the property must be an owner-occupied single family home.
The amount of loan available for a buyer also varies from one location to another. In a situation where the buyer is not able to meet the down payment or closing cost requirements of a program, gift funds or grants from a non-profit organization or a government agency can be used.
For professional guidance, one can join an online class offered by many HUD-approved agencies or third party companies for the benefit of first time home buyer. Alternately, you can visit the website of the United States Department of Housing and Urban Development.