Recent headlines of rising home prices and increasing rates might have first-time buyers worried. But should they?
Not so much.
Once you factor in median incomes and other important economic data, homes are actually still quite affordable by historical standards. Throw in the plethora of first-time homebuyer programs that are out there, and the American Dream is still very well within reach for many.
Are you looking to buy your first home, but are worried about rising prices? Don’t fret. Here are some programs that can help:
CalFHA offers several mortgage loan options aimed at first-time homebuyers in California. This includes a Zero Interest Program for buyers to finance even their closing costs, making it possible to come in with $0 funds for closing. The MyHome Assistance Program provides an up to 3.5% down payment via a deferred-payment loan, while the School Program offers teachers, school administrators and other educational staff an up to 4% down payment.
FHA loans are still a great option for first-time home buyers, even as home prices creep a little higher. Requiring only a mere 3.5% down, buyers can get a $200,000 home with just $7,000 up front. These mortgages typically come with lower interest rates and closing costs than conventional loans do, too.
If you’re buying in a rural area, you can likely take advantage of loans from the U.S. Department of Agriculture. Designed to encourage population growth in smaller parts of the U.S., USDA loans have low credit score requirements, and many don’t even require a down payment. Use this tool to see if a home you’re considering is located in a USDA-eligible part of the country.
Fannie Mae offers a wide range of loan programs that can make home buying more affordable. The HomeReady program is a popular one with first-timers, as it requires just a 3% down payment and a 620 credit score. The organization also offers construction loans if you’re looking to renovate your home
Freddie Mac’s Home Possible mortgage requires just 3 to 5% down, depending on your income, and you can finance up to 97% of the home’s appraised value. You can also use it on all types of properties – from single-family homes to condos. Freddie Mac has a variety of down payment assistance programs that can help, too.
If you’re thinking a fixer-upper may be the way to go, the 203(k) loan may help make your dream come true. These “rehabilitation” loans take into account the value of the property after you’ve made repairs and renovations, so you can borrow what you need to get the home move-in ready. Down payments on 203(k) loans go as low as 3%.
More Ways to Save
For more ways to save money on your home purchase, make sure to check out our past posts on down payment assistance programs and closing cost grants, and get in touch with a SnapFi loan officer. We’ll help you determine the right loan programs for your home buying goals and budget.