All About Mortgage Loans for First Time Home Buyers

Types of Mortgage Loans for First Time Buyers

First time home buyers are capable of qualifying for many different types of loans, and there are pros and cons involved with each. In the end, your lender can help you pursue the loan that works best for you. Here are some of the loans you may benefit from as a first time home buyer:

Conventional Loans

Conventional loans are commonly given out by mortgage lenders. While many other loan types have benefits that come with being backed by the government, conventional loans do not. 

However, that doesn't make them bad for first time home buyers; it just might be more difficult for a first time home buyer to qualify for a conventional loan because these loans are riskier for mortgage lenders. 

One benefit of conventional mortgage loans is that because they are not backed by the government, these loans come with fewer restrictions on the type of property you can buy. And, if you put a 20% down payment on this loan, you will not be required to pay mortgage insurance. First time buyers are only required to put 3% down on a conventional loan, and these types of loans often have competitive rates.



FHA Home Loans

FHA loans are good for people who can't afford a large down payment and have a low credit score. This is why these types of loans are often so appealing to first time home buyers, and why some believe that they are intended to be a first time home buyers loan. Those who don’t qualify for a conventional loan may be able to get an FHA loan. Another benefit of this type of loan is that you are only required to put 3.5% down. 

Because these are government-backed loans, there are restrictions on the types of properties that can be bought. Also, the property must be in acceptable condition and no vacation or rental properties are covered. Something that conventional loans don’t have but FHA loans require is a premium monthly mortgage insurance. PMI lasts the entirety of the loan with no exceptions, and that's something to seriously consider when choosing between FHA and conventional loans.

Case Specific Home Loans

Conventional loans and FHA loans are the main types of home loans that are generally available to everyone. However, there are some other choices out there for people with special circumstances outside of the usual home loan qualifications. These case-specific home loans have some benefits that you can’t get with any of the previously mentioned loans. These mortgage loans aren’t limited to first time home buyers, but if you can qualify then it might be a good idea to consider them.


USDA First Time Home Buyer Loan

The USDA rural development loan is only for people who are purchasing homes in what is considered to be a rural area.There is a household income limit requirement that you must fall under in order to qualify, and that limit will depend on the specific area where the home is located. 

One of the greatest benefits of a USDA loan is that no down payment is required. The interest rates are competitive, and monthly mortgage payments are low. You will not qualify for this loan if you are buying a large home with a pool; the goal of USDA loans is to provide basic housing needs to people in rural areas.

First Time Home Buyer VA Loan

VA Home Loans are meant to help active military servicemen, veterans, and their spouses to purchase homes. They are given through private lenders but backed by the government. What this means is that you are more likely to be approved for the loan because the lenders are guaranteed to not lose money. 

With VA loans, the rates are competitive and no down payment is required. For a first time home buyer, this can be a very helpful loan characteristic. Some of the disadvantages of VA loans are that not every property is eligible, and you must pay a one-time funding fee.

The Benefits of Home Loans

As a first time home buyer, you’ll be looking for home loans with some of the best offers such as a low down payment and loose qualifications. Here are some of those features that are sought after in mortgage loans as well as which loan types can actually provide them:

No Deposit Home Loans for First Time Buyers

The only two loans that allow for a 0% down payment are USDA and VA loans. However, many people will not be eligible for these loans. If you can, then a lenient and zero down payment loan would be something to take advantage of as a first time home buyer.


Home Loans for Poor Credit First Time Buyers

The best home loan for those with bad credit or employment history is the FHA loan. It is possible to qualify for an FHA loan with a credit score as low as 500. In order to only pay 3.5% down, you must have a credit score of 580 or higher.

Best Mortgage Lenders for First Time Home Buyers

Buying a home for the first time can be a stressful process, especially if you don’t fully understand your loan options. The most important characteristic first time home buyers need to look for in their mortgage lender is someone who is willing to slow down and explain the options. That’s why not just any mortgage lender can be trusted to do what’s best. However, Brian the Lender is proud to provide honest and outstanding service to current homeowners and first time home buyers alike. To get in touch with Brian about which loan is best for you, call or text: 706-973-7933.