First Time Home Buyer Financial Assistance

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This is the second in a series of articles for first-time home buyers. This article discusses the exceptional opportunities that exist for financial assistance for First-Time Home Buyers.

First Time Home Buyers Advantage

First time homebuyers have a real advantage in the real estate market because of the various financial assistance programs available to them. In addition to the programs offered by the federal government, which we will describe in this article, many states offer grants and low interest loans to first time home buyers if your income falls within the qualification limits. For many people, these financial assistance programs can be the difference between buying your own home or not.

FHA - The Place to Start

The first place to look for help is the Federal Housing Administration (FHA). FHA loans have been helping people become homeowners since 1934 by insuring your loan, so your lender can offer you a better deal. Typically, FHA loans offer low down payments, low closing costs, and easy credit qualifying.

With an FHA loan your down payment can be as low as 3% of the purchase price, and most of your closing costs and fees can be included in the loan. Also, the money can come from a family member, employer or charitable organization as a gift, which is unique to an FHA loan. For a more detailed look at FHA loan requirements see this article titled: FHA loan requirements.

The eligibility requirements and features of the loan are:

  • The borrower must meet standard FHA credit qualifications.
  • The borrower is eligible for approximately 97% financing.
  • The borrower is able to finance the upfront mortgage insurance premium into the mortgage. The borrower will also be responsible for paying an annual premium.
  • Eligible properties are one-to-four unit structures.
  • The tax credit is available for first-time home buyers only.
  • The maximum credit amount is $8,000.
  • Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.

You can learn more about the mortgage limits in your area, on this HUD website https://entp.hud.gov/idapp/html/hicostlook.cfm

Qualifications for FHA loans vary by location. If you are interested in an FHA loan, Lending Tree has recently expanded its service to allow borrowers looking for new loans or refinancing to check their eligibility for FHA loan programs based on their local county-level loan limits and loan-to-value ratios.

Opportunity of a lifetime!

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Here is an opportunity of a lifetime for first time home buyers: The recently enacted 2009 Economic Stimulus Package authorizes the first-time home buyer tax credit. For first-time home buyers, this newly enacted legislation, provides a tax credit of as much as $8,000. But time is of the essence. Only homes purchased on or after January 1, 2009 and before December 1, 2009 are eligible. The previous provision to pay back the tax credit has been removed with the recent legislation, thus making it an incredible deal for those who qualify.

You can find the basics here: $8,000 Tax Credit for First Time Home Buyers and an FAQ located here: http://www.federalhousingtaxcredit.com/faq.php

Other Opportunities for First Time Home Buyers

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Although not restricted to first-time home buyers, the following financial assistance programs can also help get you into your first home.

Fixer-Uppers: FHA has a loan that allows you to buy a home, fix it up, and include all the costs in one loan. For more information see these articles: FHA 203K Loans or 203K FHA Loan FAQ or Funds for Handyman-Specials and Fixer-Uppers

Good Neighbor Initiatives: Properties in designated areas are available at a reduced sales price to law enforcement officers, teachers, firefighters, emergency medical technicians, nonprofits and local governments. Read more about these Good Neighbor Initiatives

Want to make your new home more energy efficient? You can include the costs of energy improvements into an FHA Energy-Efficient Mortgage (EEM). FHA’s Energy Efficient Mortgage program helps home buyers or homeowners save money on utility bills by enabling them to finance the cost of adding energy efficiency features to new or existing housing as part of their FHA insured home purchase or refinancing mortgage. For More information: Energy Efficient FHA Mortgages

Manufactured Housing and Mobile Homes: FHA has financing for mobile homes and factory-built housing. They have two loan products – one for those who own the land that the home is on and another for mobile homes that are - or will be - located in mobile home parks. For more information: HUD Manufactured Home Fact Sheet

The U.S. Department of Housing and Urban Development (HUD) sells foreclosed homes (HUD Homes at significant discounts.

A HUD home is a 1 to 4 unit residential property acquired by HUD as a result of a foreclosure action on an FHA-insured mortgage. HUD becomes the property owner and offers it for sale to recover the loss on the foreclosure claim.

Almost anyone can purchase a HUD home. If you have the cash or can qualify for a loan (subject to certain restrictions) you may buy a HUD Home. HUD Homes are initially offered to owner-occupant purchasers (people who are buying the home as their primary residence). Following the priority period for owner occupants, unsold properties are available to all buyers, including investors.For more information see: How to Buy a HUD Home

All HUD properties available for purchase by the public are offered for sale at HUD Internet listing sites (http://www.hud.gov/homes/index.cfm) maintained by management companies under contract to HUD. Any real estate broker registered with HUD may submit an offer and contract to purchase on your behalf. HUD pays the real estate broker’s commission, if included in the contract.

Resources for first-time home buyers: The U.S. Department of Housing and Urban Development: www.hud.gov/buying

First-timers also can visit grants.gov for more information on grant programs available through the federal government.

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