Loans and Grants for First Time Home Buyers

If you plan to settle down in life, the first thing is owning a home. Well! The process of buying a home sounds tough. However, it can be made easier, if you plan and proceed carefully. You may start by estimating the amount that you wish to borrow from the bank or other financial institutions. Make sure it matches the amount that you can afford; you can take into consideration your monthly expenses, credit rating, income, interest rates and downpayment (if needed). After calculating and comparing the amount, you can think of applying for a first time home buyer loan, in order to quicken the process of owning your own home.

While applying home loans, you may require to shop around and talk to several lenders that offer first time home buyer loans. Such type of mortgage loans may provide financial assistance such as minimum or no downpayment, low interest rates, minimum fee charges and loan forgiveness programs. However, it is to be noted that a lender provides these features under certain conditions. For example, you need to be a first time home buyer and your income should match the level, as stated by the lender. If you earn a hefty income, you may not be qualified for a first time home buyer loan.

In case, you are qualified for the first time home buyer loan, you may be interested in knowing the loan amount that will be offered. Well! You may be surprised to know that majority of the programs restrict first time buyers from buying expensive homes. According to the terms and conditions of a first time home buyer loan, you have to reside in the primary residence and cannot rent it out.

Some states even offer grants to first time home buyers. In the United States, the federal government has introduced the American Dream Down Payment Initiative Grant, in which they tie-up with banks, to offer grants to first time home buyers. According to this Act, the buyer is granted six percent of the home value. You can use the grant amount for paying the downpayment. You don't have to pay interest and monthly installments on the amount granted. There are even chances of forgiving the loan, provided you have lived in the house for 30 years. That is why, these grants are often referred to as 'free money'.

However, similar to the rules and regulations under the first time home buyer loan, you need to meet certain criteria to qualify for the government grant program. Your annual family income (calculated as per the income and number of dependents) should match the minimum income, set under the program. It is to be noted that not all the states in the United States offer this grant. However, in case, your state does not offer it, you can obtain the grant for home buying, with the assistance of the federal government.

Some lenders also offer first time home buyer loan, if the applicant has not purchased a home in the past three years. Being a home buyer for the first time does not mean that you should opt for a first time home buyer loan. Rather, you can research and explore other financial options, and choose according to your convenience. You can talk to lenders, compare the fee charges and interest rates, and negotiate for a better deal. For better assistance in home buying and financial planning for the same, you can always consult a certified housing counselor. He/she will help you to manage your debt (if any) and provide a better solution for paying downpayment.