First-Time Homebuyer Programs Exclusive – to (97% LTV) more information for your decision…updated 10-04-23
If you are looking at your options for First-Time Homebuyer Programs, with incentives and more, you have come to the right place.
Having had many roles in Mortgage Lending gives us the ability to search out the best options if you are looking for a program that will allow you the ability to own a home without going broke.
Thinking about your mortgage options first is one of the most important emphases needed before going to the Mortgage Lender, Broker, or Loan Officer.
What Are Your Options For First-Time Homebuyer Programs Exclusive
Conventional Standard Eligibility Mortgage: The number one option is the mortgage for a principal dwelling with (1 unit) with an LTV of 95%. This is a 5% downpayment option.
The Home Ready program with a maximum of 97% loan to value for an owner-occupied mortgage as well as a 3% downpayment option.
For a 95 – 97% LTV- under the standard eligible requirements loan must be underwritten through the lender’s automated underwriting Desktop Underwriter. At least one applicant must be a first-time homebuyer for the higher loan value.
If all applicants are first-time homebuyers, at least one applicant must complete the Homebuyer Education requirement.
There are additional specific guidelines regarding your debt to income, credit scores, and assets.
If you have a debt-to-income ratio that is in line, assets from your downpayment, satisfactory income/employment, and good credit with credit scores ranging from 680 and above. This loan may be for you.
HomeReady Mortgage -this program is an option for homebuyer assistance and is for lower-income borrowers. The loan-to-value is up to 97% with flexible guidelines that include a 3% downpayment, and flexible funds to include gifts, grants from lenders, and other eligible sources.
This loan allows for a community second as well and there are no guidelines for the borrower and they do not need a minimum downpayment from their own funds.
If all borrowers are first-time homebuyers-at least one borrower must take the Homebuyer Education requirement.
Income is based upon 80% of the medium income requirements for the location of the property.
The borrower is not required to be a first-time homebuyer.
Mortgage Insurance requirements are lower than the standard mortgage loan shown in number 1.
There are other qualifying aspects for the loan just like any other loan but they are geared to help the lower-income borrower.
Adjustable Rate Mortgages- *FNMA and FHLMC retired the traditional LIBOR ARM Loan products in December 2020. The ARM products are now called the – Secured Overnight Financing Rate (SOFR) for newly originated loans.
*There are still loans out there that originated with the Libor products of 3/1 5/1, 7/1, and 10/1 that will have a transition period per FNMA and FHLMC the GSEs. Read about that here. Libor rates will no longer be published after the end of July 3, 2023. These current ARM loans that are closed as Libor ARM will be converted to SOFR.
**Your lender will give you the terms of your ARM loan that you should expect at closing.
What is an Adjustable Rate Mortgage-
This is a mortgage product that usually has a fixed rate initial term of a certain period, and then will adjust to a variable rate term for the remaining term of the loan. The term of the loan does not change with the adjusted rate unless there has been a principal reduction made to the loan.
Adjustable Rate or ARM mortgages are available to 95% loan to value. Programs include 3 yr. ARM, 5yr. ARM, 7 yr. ARM and a 10 yr, ARM.
The 3-year ARM – means that the rate is set for the first 3 years and will then adjust every 6 months in the future, and likewise for the 5, 7, and 10 yr. ARMs. All documents have been updated for this adjustment. Note, mortgage/deed of trust, disclosures.
FHA Loans – are government-insured loans with flexibility for all borrowers who may need more flexible homebuyer assistance and qualify as a First-Time Homebuyer Program Exclusive here…
The Federal Housing Association makes loans for first-time home buyers who need assistance with the downpayment, loan to values, higher debt to income (DTI), lower credit scores, flexible income, assets, etc.
Flexible guidelines include the following:
- minimum credit score down to 580
- higher loan to values without needing a homebuyer minimum investment in the loan
- 3.5% downpayment may come from flexible sources of funds to include gifts from family, employer, grants, homebuyer assistance programs
Requirements for FHA loans **different rules depending upon the exact product
- upfront MIP (mortgage insurance premium) of 1.750% – this is added to the loan amount
- monthly MIP is required *this varies from 50%- 75% based upon criteria -for a 30-year loan. **
- stable income and employment
- debt to income ratios in line at 36 to 43%
- primary residence purchase -owner-occupied
USDA Loans – United States Department of Agriculture program
These are loans that offer a zero down payment mortgage option backed by the United States Department of Agriculture (USDA) and offered by USDA- to approved lenders to help fund rural housing development for low-to-moderate-income individuals and families throughout the U.S. * the guidelines are flexible but as all other programs, certain underwriting criteria is required.
Veterans Administration (VA) as you probably know these loans are for individuals who have served their country. However, these are special loans with an LTV of 100%. There is a VA funding fee that is added to the loan.
Individuals who are still enlisted in the service and those who have been discharged are eligible to apply for this type of program.
*These are not the total requirements for qualifying for these loans. The information posted does not include the complete and full underwriting process/criteria for the loan.
Disclosure: The programs listed here for lenders who use the GSE’s guidelines include; Fannie Mae, Freddie Mac, FHA, and USDA. (Most Banks, and Mortgage Companies all use these guidelines). Most mortgage loans are usually packaged, sold, and submitted to the GSEs and/or Government institutions listed after loans are closed.
Also, please note that we are adamant about posting the latest updated information available. However, mortgage lending, rules, regulations, and guidelines sometimes change daily. A Mortgage Lender(‘s) guidelines may vary per the institution’s own similar criteria and to fit their lending practices.
