The first time is always the best time, right? It’s also nerve racking. To help first-time home buyers, we’ve assembled this list of 7 first-time buyer programs. We explain what the programs are and their benefits.

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7 Top First-Time Home Buyer Programs for 2021

• FHA loan
• USDA loan
• VA loan
• Fannie Mae/Freddie Mac
• Fannie Mae’s HomePath ReadyBuyer Program
• FHA Section 203(k)
• MSHDA MI Home Loan

First-Time Home Buyer Mortgage Programs Explained

Here’s what you need to know about each of these first-time home buyer mortgage programs.

FHA Loan

The FHA, or Federal Housing Administration, provides mortgage insurance on loans made by FHA-approved lenders. FHA insures these loans on single family and multi-family homes in the United States and its territories. It is the largest insurer of residential mortgages in the world, insuring tens of millions of properties since 1934 when it was created.

• FICO® score at least 580 = 3.5% down payment.
• FICO® score between 500 and 579 = 10% down payment.
• MIP (Mortgage Insurance Premium) is required.
• Debt-to-Income Ratio < 43%.
• The home must be the borrower’s primary residence.
• Borrower must have steady income and proof of employment.

USDA Loan

The Section 502 Guaranteed Loan Program assists approved lenders in providing low- and moderate-income households the opportunity to own adequate, modest, decent, safe and sanitary dwellings as their primary residence in eligible rural areas. Eligible applicants may purchase, build, rehabilitate, improve or relocate a dwelling in an eligible rural area with 100% financing. The program provides a 90% loan note guarantee to approved lenders in order to reduce the risk of extending 100% loans to eligible rural homebuyers – so no money down for those who qualify!

VA Loan

A VA mortgage loan (also known as a Department of Veterans Affairs home loan) is one of the most useful military benefits. If you qualify, you can buy or build a home, or refinance an existing home mortgage, with as little as $0 down, great rates and financing with no mandated cap. Another benefit over traditional mortgages is that there is no PMI (Private Mortgage Insurance, the monthly insurance fee charged to protect the bank until you reach at least 20 percent equity).

For most service members and veterans who qualify, a VA loan is one of their most valuable benefits and a no-brainer over other, traditional mortgage types. This section offers an in-depth explanation of the VA loan process, and instructions on how to submit an application.

Fannie Mae or Freddie Mac Programs

Fannie Mae and Freddie Mac were created by Congress. They perform an important role in the nation’s housing finance system – to provide liquidity, stability and affordability to the mortgage market. They provide liquidity (ready access to funds on reasonable terms) to the thousands of banks, savings and loans, and mortgage companies that make loans to finance housing.

Fannie Mae and Freddie Mac buy mortgages from lenders and either hold these mortgages in their portfolios or package the loans into mortgage-backed securities (MBS) that may be sold. Lenders use the cash raised by selling mortgages to the Enterprises to engage in further lending. The Enterprises’ purchases help ensure that individuals and families that buy homes and investors that purchase apartment buildings and other multifamily dwellings have a continuous, stable supply of mortgage money.

Fannie Mae’s HomePath ReadyBuyer Program

Buying a home can be a daunting process, especially for first-time Buyers. HomePath supports smart and sustainable homeownership. In addition to breaking down the home buying process into easy-to-grasp lessons online, you can also benefit by receiving up to 3% closing cost assistance toward the purchase of a HomePath property. It’s simple; just successfully complete the online course to receive a course completion certificate. Give it to your real estate agent to include it when submitting your initial offer on a HomePath property.

Plus, completion of the HomePath Ready Buyer™ course also meets the homeownership education requirement for Fannie Mae purchase loans*.

Homeownership Education Requirements

• For HomeReady, if ALL occupying borrowers are first-time homebuyers, then at least one borrower must complete the HomePath Ready Buyer™ course, regardless of LTV.
• For  other purchase transactions where LTV, CLTV, or HCLTV > 95%, if ALL occupying borrowers are first-time homebuyers, then at least one borrower must complete the HomePath Ready Buyer™ course, regardless of the product chosen.

FHA Section 203(k)

FHA’s Limited 203(k) program permits homebuyers and homeowners to finance up to $35,000 into their mortgage to repair, improve, or upgrade their home. Homebuyers and homeowners can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or an FHA appraiser. Homeowners can make property repairs, improvements, or prepare their home for sale.  Homebuyers can make their new home move-in ready by remodeling the kitchen, painting the interior or purchasing new carpet.

MSHDA MI Home Loan

The Michigan State Housing Development Authority (MSHDA) offers a MI Home Loan program that provides down payment assistance to first-time buyers. Mortgage 1 is Michigan’s right-time leader in MSHDA loans.

MSHDA program features and eligibility requirements include:

• Available for credit scores as low as 640
• The alternative credit review is available for some borrowers who have no credit score
• The minimum down payment is 3% and down payment assistance is available
• Available to first-timers as well as repeat home buyers in economically disadvantaged target areas
• You have your choice of conventional, FHA, VA or USDA loans
• The home has to be your primary residence
• The home sale price limit is $224,500
• There are income limits that vary by location
• The overall debt-to-income ratio of 45% or less
• Borrowers must attend a homebuyer education course if you receive down payment assistance
• Borrowers have to contribute at least 1% of the loan amount.

Are You a First-Time Home Buyer? Trust Us to Help

Mortgage 1 is recognized as the most-trusted lender to first-time home buyers. We’d love to help you. Call us at 866-532-0550 or find a Mortgage 1 Loan Officer near you to learn how we can help you get the best mortgage possible.