6 Mortgage Options for the First Time Homebuyer

As a first time homebuyer, buying a home at the Lake of the Ozarks is a very exciting time. It can also be a very stressful time - especially when you're trying to figure out your financing options. For those who don't have the best credit or a lot of money saved back to put toward a down payment, buying a home can seem impossible. Fortunately, there are several programs available to first time buyers that provide them with great mortgage opportunities. This week, we'll look at 6 common lender programs that help first time homebuyers get into their first home:


1. FHA loan
In an FHA loan, the Federal Housing Administration, an agency within the U.S. Dept of Housing and Urban Development, insures the mortgage. The FHA’s backing offers lenders a layer of protection, meaning that your lender won’t experience a loss if you default on the mortgage.

FHA loans typically come with competitive interest rates, smaller down payments and lower closing costs than conventional loans, which makes it a great choice for first time buyers. If you have a credit score of 580 or higher, you could be eligible for a mortgage with a down payment as low as 3.5 percent of the purchase price. If your credit score is lower than 580, you still might qualify for an FHA mortgage, but the down payment would be at least 10 percent of the purchase amount.

2. FHA Section 203(k)
If you’ve determined that a fixer-upper is best for your budget, the Section 203(k) rehabilitation program may be a good fit. This type of loan takes into consideration the value of the residence after improvements have been made. It then lets you borrow the funds you’ll need to carry out the project and includes them in your main mortgage. The down payment for a 203(k) loan can be as low as 3 percent.

3. Fannie Mae or Freddie Mac
Fannie Mae and Freddie Mac are government-sponsored entities. They work with local lenders to offer mortgage options that benefit low- and moderate-income families. With the backing of Fannie Mae and Freddie Mac, lenders can offer competitive interest rates and accept down payments as low as 3 percent of the purchase price.

4. USDA loan
The U.S. Department of Agriculture (USDA) also has a homebuyer assistance program. While the program focuses on homes in certain rural areas, you don’t need to buy or run a farm to be eligible. There may be no down payment required, and the loan payments are fixed.

Applicants with a credit score of 640 or higher typically get streamlined processing. With a credit score below 640, you still can qualify for a USDA loan, but the lender will ask for extra documentation about your payment history. Keep in mind that there are income limitations, which can vary by region.

5. VA loan
The U.S. Department of Veterans Affairs (VA) helps active-duty military members, veterans and surviving spouses buy homes. The VA guarantees part of the loan, making it possible for lenders to offer some special features. VA loans come with competitive interest rates and require no down payment. You aren’t required to pay for private mortgage insurance (PMI), and a minimum credit score isn’t needed for eligibility.

6. Good Neighbor Next Door
The Good Neighbor Next Door program, sponsored by HUD, provides housing aid for law enforcement officers, firefighters, emergency medical technicians and pre-k through 12th-grade teachers. Through this program, you can receive a discount of 50 percent on a home’s listed price in regions known as “revitalization areas.” To qualify for this program, there are stipulations that must be met - such as the length of time you're required to live in the home.

So if you're considering buying your first home at the Lake of the Ozarks and have questions about mortgage options, you now have some options to check into! Make sure you're equipped with a top-notch real estate team to make sure every step of your transaction is handled professionally and thoroughly. Our team of consultants provides you with the communication and service you deserve throughout your entire experience. By having a team, we make buying a home at the Lake of the Ozarks easy. Rest assured, you're in good hands with the best real estate team at the Lake of the Ozarks - the Fran Campbell Team!

Contact the Fran Campbell Team for all of your real estate needs!

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