It can be confusing to home buyers to navigate the maze of rules regarding home ownership and first time home buyer programs.   What are the benefits?  What are the limits?  How do you know if you qualify?

The first thing first time home buyers should know is that loan programs that most suitable for them may not necessarily be limited to first time home buyers.   Even the term ‘First Time Home Buyer’ is misleading.  In the mortgage world a FTHB is someone who hasn’t owned a home in the last 36 months.  FTHB doesn’t mean that you’ve never owned a home.   Some low, or even no, down payment loans are not limited to FTHBs, USDA Rural Development, FHA and VA home loans are good examples. 

Neither Veterans Administration (VA) nor USDA Rural Development home loans are limited to first time home buyers.   Yet they both offer 100% financing.  Maximum financing is a great feature for buyers new to home ownership.   HUD’s FHA home loan allows borrowers loan amounts up to 96.5% of the home’s value.   These types of loans insist that the properties be your primary residence.   You can own other real estate in the case of VA and FHA, but not with USDA Rural Development.   The interest rates on these loans are usually comparable to conventional loans.

In NH were I live the most talked about first time home buyer loan is from the NH Housing Finance Authority.  In most areas of the state the home buyer can’t have owned a property within the prior 3 years.  But in “targeted areas” such as Manchester,  the first time home buyer requirement is waived.   That means that a home seller who sold his house on a Monday morning could use a NHHFA ‘first time home buyer’ loan to buy another home on Monday afternoon, just as long as the new home was in a targeted community.

Most of these loans have limits.  For example, NH Housing and Rural Development each have their own maximum income limits, but FHA and VA do not.   All but Rural Development have not-to-exceed purchase price limits on the property.   All of them set limits on what a lender can charge on your closing costs.  

An additional benefit of home loans like these that are geared to, but not limited to, first time home buyers is that some of them are a benefit when you sell one home to buy the next.   For example, someone with a home to sell that owes more on the house than it is worth may have saved a down-payment for the next house.   But they can’t sell the house for what they owe on it as home values have declined.   In that case it may be better to use the cash to pay down the mortgage on the old home in order to sell it, then buy the new home with a no down payment loan. 

Finding out if your particular circumstances qualifies you for a home loan is just a call away.  You can find my contact information by clicking the tab above.