As a Colorado mortgage broker, we spend a lot of time talking about first-time home buyer’s mortgages. They have been around long enough that it is easy for us to assume that everybody knows what they are. But reality tells a different story. We frequently work with first-time buyers who have no idea that there are special mortgages designed just for them.
Whether it’s a bank or a Colorado mortgage lender, lenders offer a variety of first-time buyer programs based on availability. If you are looking for that first house, you may be eligible to participate in such a program. We can help you figure it out. In the meantime, we explain below what makes a first-time home buyer’s mortgage so different.
Programs With a Purpose
First-time home buyers’ programs are mortgage programs with a purpose. That purpose is to help people achieve the American dream of owning a home. With prices higher than they have ever been, comparatively high interest rates, and a limited inventory of available houses, first-time buyers need all the help they can get. They typically get that help through:
- Financial incentives.
- Lower interest rates.
- Down payment assistance.
- Tax credits.
Programs are designed to help first-time buyers overcome some of the financial barriers that could otherwise keep them from the American dream. Note that first-time home buyer’s mortgages are separate and distinct from grants. A grant is direct cash assistance that reduces the overall amount a first-time buyer needs to pay for a new home.
Four Types of First-Time Home Buyer Programs
Colorado mortgage brokers and lenders work with a variety of first-time buyer programs according to availability. Note that availability changes. Some programs are perpetual while others are offered for a limited time only. That is one of the reasons we recommend working with a mortgage broker instead of going directly to a bank or private lender.
Be that as it may, here are four common types of first-time home buyer programs:
- Low Down Payment – Conventional loans with down payment requirements that can be as low as 3%.
- Down Payment Assistance – Mortgages with matching grant programs to provide cash for down payments.
- Government Programs – Home loans offered through banks and private lenders but backed by the federal or state government.
- Local Programs – Programs sponsored at the local level by nonprofits, employers, etc.
You might already be familiar with some of the government-backed mortgages for first-time buyers. Federal Housing Administration (FHA) loans for first-time buyers typically offer lower down payments and flexible credit requirements.
The USDA tends to offer loans with no down payment requirement on properties located in certain rural areas. Meanwhile, the VA can offer zero down payment and low interest rate loans to veterans – in addition to other types of VA loans.
Help When You Need It Most
The best way to describe first-time home buyers’ mortgages is to say they offer help when buyers need it most. For so many, the difficulty in buying that first home has very little to do with making monthly mortgage payments. First-time buyers are already paying rent. They already have the money in the budget.
Rather, the biggest problems seemed to be down payment and closing costs. First-time buyer’s programs take the edge off so that getting one’s foot in the property door is financially easier.
Mortgage Maestro is a Colorado mortgage broker with access to dozens of mortgage programs. If you are looking to buy your first house, we invite you to contact us. We can help you identify all the first-time buyer programs you might be eligible for. We can help you get the best deal.
