Home Loans for First Time Buyers

Buying a home, to be more specific, your own home, is perhaps one of the most important things in life. Home buying is like a way through a harsh desert and then when you come to an oasis, you are absolutely elated. Same goes with buying your own home. One has to go through a lot of ups and downs and winding turns and a long way to go. By winding turns, and ups and downs, I mean the governmental and financial processes in home loans one has to go through while buying a house. But finally when the mission is accomplished, you feel on the top of the world. A first time home buyer is jittery about hundreds of things - finance, government documentation and paperwork, house registration and what not. But these days the good part is, a lot of options are available when it comes to home loans for first time buyers. Following is a brief overview of first time home buyer loans.

Types of Loans for First Time Home Buyers

Federal Housing Administration (FHA) Loans
FHA is the most widely used loan in case of a first time home buyer. What makes it a good option is its low down payment requirement - 3.5% and the applicant does not need a smashing credit score. These two things make it the best option amongst all first time home buyer loans. For a majority of fixed rate loans available to a first time home buyer, there is a fixed period of 10 to 30 years.

Conventional Loan
Conventional loan is a good option for people with excellent credit. First time home buyer in a conventional loan needs to pay the down payment ranging from 5% to 20% of the purchasing price of the house. But in case the first time home buyer has a high credit score he/she can get an advantage of lower interest rates. Further, depending on the creditworthiness of the buyer, interest rates can also decrease.

FHA Housing and Urban Development Loan
This is an especially good choice amongst first time home loans for those keen on buying a FHA foreclosure home. Under this program, down payments as low as $ 100, small amount of repair escrow and around $ 2,500 for closing cost assistance is included.

Some more first time home buyer loans include Veterans Affairs Loans, Veteran's Affairs Loans and United States Department of Agriculture Loans. These were basically the major Federal first time home buyer loans. Generally most of the home loans for first time buyers include very low or absolutely nil down payment, lots of grants, loan forgiveness, deferring payments and so on. The bottom line is to lure the first time home buyer and nothing else.

Problem with First Time Home Loans

First and foremost, you may not be able to use such kind of a loan, if you are aiming at comparatively expensive properties. The catch is to restrict a first time home buyer to properties on the lower end of the property scale. Plus, these also restrict the dollar limit on the property you purchase. Another important thing is if you plan to rent the place, you cannot avail the benefits of the first time home buyers loans. Rather, it is advisable not to use it in the first place. Then, if you are thinking of checking out or are pondering over subsidized first time home buyer loans, there could be some glitches in that, like:

• If you sell of your home too soon, you would not be able to enjoy the benefits of this program.
• You might need to opt for a lower value home, which is not exactly what you are looking for.
• A first time home buyer may also have to part with an amount of increased home values, to contribute to the first time home loans or loan programs.
• Your choice of loan types could get scanty, may be a 30 year fixed rate mortgage.

Home loans for first time buyers are all more or less the same, at least the federal ones. There is hardly any difference, when it comes to the bottom line. But the fact that they all have some catches and hidden conditions cannot be ignored. So all said and done, chose the one which gives you good vibes and less headache!

Happy Home Hunting!