My husband and I have been on the journey of saving for our first house. As first-time homebuyers, we have been starting from scratch in figuring out exactly what it takes to buy a house.
After meeting with our credit union recently, we were deflated and feeling like we’ll never be able to buy a house.
But here’s a little secret: most credit unions and realtors won’t tell you about programs that you can qualify for that are out there for first-time homebuyers.
Here are five programs you should know about that can help first-time homebuyers afford a house.
Neighborhood Stabilization Program
The Neighborhood Stabilization Program helps first-time homebuyers by providing 30 percent of a home’s purchase price up to $50,000. In order to qualify for the program, a family’s income cannot exceed 120 percent of the area median income.
WISH and IDEA
These programs offer a three-to-one matching grant up to $15,000 for families that earn no more than 80 percent of the area median income. Money can go toward a down payment and closing costs. Do an internet search for local workshops in your area to learn more about the programs and how to qualify. These programs can often be used in conjunction with other down payment assistance programs.
If you don’t have a low enough income to qualify for the programs mentioned above, but don’t have enough income to qualify for a loan on your own, check out the Federal Housing Administration (FHA) loan. FHA loans have low down payments, low closing costs, and are not as strict with credit requirements.
The negatives are that some home sales will specifically say no-FHA allowed. Also, it’s important to ask about PMI since some new laws require that PMI be added to the life of the loan, rather than until the loan reaches 20% equity. Lifetime PMI—which adds a couple hundred a month to the payment—could translate into the thousands of dollars over the life of the loan.
Every state has specific programs that are meant to help those in that state. The U.S. Department of Housing and Urban Development list all state home buying programs here. Check to see which first-time homebuyer programs are offered for your specific state.
Good Neighbor Next Door program
Are you a police officer, firefighter, teacher or EMT? You may be eligible for the HUD Good Neighbor Next Door program which lets members of these professions purchase HUD homes at 50% off the appraised value. You must live in the residence for three years. Current homeowners cannot participate and you can’t have owned a home within the last year.
This is a really great deal if you’re willing to do a bit of work.
Ultimately, there are a lot of great programs out there to help first time homebuyers. You just need to do some digging.