Do you desire to know the mortgage options for first-time student homebuyers? Then stick to this article.

Do you know that first-time homebuyer programs can help you make your dream come to reality? However, these programs will help you get into the home with a low-down payment (such low that the usual 20% that is) or get a better interest rate on your loan (that can save thousands over the long run).

Yes! Interest rates have risen in the past years and housing prices stay stubbornly high. But it doesn’t mean homes are entirely unaffordable. Keep reading to know the help that’s available wherever you want to live.

READ MORE: Guide to first-time homebuyer loans and programs

Who Qualifies for The Mortgage Option for First-Time Homebuyers?

While programming qualifications vary, one of the common first-time homebuyer programs comes from the Federal Housing Administration.  The FHA defines first-time home buyers as anyone that meets the following criteria:

• You haven’t owned the home in the three years before purchasing the property. For married couples, only one spouse must meet the requirement of not owning property in the previous years.
• Also, if you are a single parent or displaced homemaker that has only owned a home with the former spouse.
• You’ve either only owned property not permanently affixed to the permanent foundation or not complained with state, local or model building codes.

Types of Mortgage Options for First-Time Homebuyers

1.    Low-down Payment Conventional Loans

Conventional loans are among the common types of mortgages: they don’t have specialized eligibility requirements and are offered by a variety of reputable lenders, both traditional and online.

Moreover, they are certainly one set exceedingly new down payment minimums: just 3% of the home purchase price. Fannie Mae and Freddie Mac set borrowing guidelines for conventional loan programs. These programs include:

●     Conventional 97 Mortgage

Fannie Maw and Freddie Mac both back the Conventional 97 program, which only requires 3% down but a minimum credit score of 620.

In most conventional low-down-payment mortgage programs the borrower is also required to pay for private mortgage insurance (PMI) with additional costs with their monthly mortgage payment.

●     HomeReady Mortgage

HomeReady mortgage program also asks for a 3% down and offers more flexible underwriting.

●     Home Possible Mortgage

Home Possible mortgage program is similar to the HomeReady mortgage, with a 3% minimum down payment.

●     Home One Mortgage

This Freddie Mac mortgage will allow 3% down with PMI but it is available for first-time homebuyers and comes with some special criteria.

2.    Government-Sponsored First-Time Homebuyers Programs

The federal government operates various first-time homebuyer loan programs. However, these often have special requirements regarding the location of type or criteria for the borrower.

However, government loans are mortgages backed by a government agency, either the Federal Housing Administration, Department of Veterans Affairs or Department of Agriculture.

They aren’t created or funded by these organizations, moreover, they’re offered through approved mortgage lenders throughout the U.S. Some lenders even specialized in certain types.

●     FHA Loan

Federal Housing Administration loans allow borrowers to buy a home with a minimum credit score of 580 and as little as 3.5% down or a credit score of 500 with at least 10% down.

Moreover, have it in my mind that if you put down less than 20%, you’ll have to pay FHA mortgage insurance of 1.75% upfront with annual premiums.

●     VA Loan

Qualified U.S. military members can apply for loans backed by the U.S. Department of Veterans Affairs (VA).

VA loans come with low-interest rates compared to other loan types and they don’t require a down payment, though there is a funding fee to pay upfront into the balance.

●     USDA

The U.S. Department of Agriculture (USDA) guarantees loans for some rural homes for up to 1100% financing, meaning no down payment. To qualify, you have to buy the home in the USDA-eligible area.

READ MORE: The best mortgage lenders for first-time homebuyers

3.    Down Payment Assistance Options

First-time homebuyers can more easily afford a home with the help of down payment assistance (DPA), which is the sum of money given as either a grant, second mortgage or matched savings.

●     Down Payment Assistance Loans

Besides grants, there are a variety of down payment assistance loans- a second mortgage you take out with the first mortgage you’re using to buy the home.

●     Low-interest Loans

These are low-interest second mortgages for a small sum that help borrowers with the down payment and closing costs. It has to be repaid, usually after some years.

●     Deferred-Payment Loans

These types of loans don’t charge interest but need to be repaid in full when you sell the home or refinance the first mortgage.

●     Forgivable Loans

You won’t have to pay back this second mortgage so long as you stay in the home for a certain amount of time and stay up-to-date with your mortgage payments.

4.    First-Time Homebuyer Programs by State

Many states and municipalities offer first-time homebuyer grants and low-interest mortgage programs. There are some even enticements to attract residents, being geared toward people to relocate from out-of-state.

5.    Employer-Sponsored Programs

Employer-assisted housing (EAH) programs help employees with housing needs, usually in neighborhoods near the workplace.

The assistance can come in various forms, like a forgivable loan coupled with required homeownership education. EAH programs are often limited to certain occupations, and there can be other restrictions like the first-time home buyer or specific tenure requirements or income limits.

READ MORE: How To Qualify For A Mortgage With Part-Time Employment

Conclusion

Taking advantage of the mortgage options for first-time student homebuyers will make your dream come true. Apply to any suitable mortgage options of your choice.