First-Time Homebuyer Loans
- posted 9.4.2019
- Taylir Paynter
- Home Loans
Being a first-time homebuyer can be an exciting time for anyone and with so much information and different loan types out there, it’s easy to feel overwhelmed. With all the loan options that are available, there’s lower down payments and flexible credit requirements to make the goal of homeownership even more feasible. If you’re considering buying your first home, the below loan options might be right for you.
What first-time homebuyer loans are available?
30 Year Fixed Rate Mortgage – This loan is one of the most popular home loans and is available for buying a home or refinancing a current mortgage. With this loan, affordable payments are available and even if the current mortgage rate goes up, yours won’t. You’ll always have the same monthly payment, without it ever going up.
15 Year Fixed Rate Mortgage – A 15-year fixed mortgage is a loan with a fixed interest rate and monthly payment over 15 years. You will typically pay a lower interest rate, so you can pay off your mortgage faster.
VA Loan – VA loans are intended to help active duty service members, veterans, and eligible surviving spouses. They provide competitive interest rates and no down payment options, depending on income. VA loans also don't require PMI (private mortgage insurance), though they do have a Guarantee Fee.
FHA Loan – This loan type is a popular choice among first-time homebuyers. A Federal Housing Administration (FHA) loan is government-insured and offered to homebuyers with low income or less than perfect credit. This loan allows you to borrow up to 96.5% of the value of a home, leaving only a 3.5% down payment.
Conventional Loan – Down payments as low as 3% are possible and there’s no upfront mortgage insurance that is required with this loan type. One of the benefits to this loan is that the term lengths can vary between 10 and 30 years.
Adjustable Rate Mortgage – An adjustable Rate Mortgage (ARM) is a loan where the rate remains fixed for a set, introductory period of time. Typically, this fixed period lasts for either 5, 7, or 10 years and at the end of the fixed-rate period, the interest rate may go up or down every year depending on the market.
Jumbo Loan – This loan can be used to buy or refinance a home and it offers homeowners greater financing flexibility. It’s designed to finance higher home prices. Typically, in most counties the Jumbo Loan limit is $484,350 but, in some areas, due to higher home prices, that limit is $726,525.
Home Improvement – Homeowners can apply for this loan for a variety of reasons, including remodeling, updating or making repairs to the home. This loan can be used for anything as simple as a roof repair or updating your kitchen.
Interest-Only Loan – An Interest-only loan is an adjustable-rate mortgage that gives the borrower the option to make interest payments last for a fixed term, usually between 5 to 10 years. Since each monthly payment only goes toward the interest, your loan balance does not decrease unless you make additional payments toward the principal loan amount.
I CAN Mortgage – This loan allows you to customize your loan term anywhere from 8 to 30 years.
USDA Loan – This loan program provides financing to low-income homebuyers in eligible rural areas throughout the country and is designed to help promote homeownership in those areas. Also, no down payment is required on this loan type.
Non-QM – This loan type is designed for borrowers who have unique income qualifying circumstances. This can include those who may be self-employed such as business owners, contractors, or musicians.
Buying your first home is an exciting time for everyone. Whether you’re actively shopping for a new home or thinking of buying one in the future, knowing all of your loan options will make shopping for a home that much easier and will bring you one step closer to making homeownership a reality! Don’t forget to use our mortgage calculator to estimate your monthly payments.
If you’re unsure which first-time homebuyer loan is best for you and your needs, give us a call and discuss which option is right for you with a New American Funding Loan Officer. We’re here to help you every step of the way!