When you are about to enter the housing market for the first time, the money you are about to spend could be daunting. Many expenses are involved when buying a home, but you might find some payment assistance available.

There are mortgage programs for first-time buyers that help make entering the housing market less of a financial struggle.

We look at first-time buyer mortgages and programs that will make buying your first home less challenging. Understanding which home loan is best will be an essential consideration.

What first-time homebuyers program could you qualify for?

You might be surprised at how many programs are designed with first-time buyers in mind. Government programs and charitable assistance could help you financially when purchasing your first property. There are also education programs to make the process less stressful.

We’ll look at some of the most beneficial first-time home buyer's loan assistance programs. It behooves potential buyers to improve their chances of getting a loan by working on their finances before applying.

Government-backed loans

If you have poor credit or don’t have the money for a decent down payment, government-backed loans could solve some of these problems.

Since the government insures these mortgages, lenders have less to worry about when they approve borrowers. This allows lenders to offer lower interest rates and other benefits, often with lower credit score requirements.

As a first-time buyer, you could qualify for a mortgage through the FHA, the USDA, or the VA.

Down payment assistance

Saving a down payment isn’t easy when paying rent and other monthly expenses. To make this easier, there are down payment assistance programs that might offer a grant or a low-interest loan to fund the down payment.

DPA loans

If you don’t have enough money for a down payment, a few loans and assistance programs are available. You could get a second mortgage that you must pay back simultaneously with your main mortgage.

Some deferred payment loans will have to be paid back when you pay off your mortgage, move, or refinance.
You might qualify for a forgiven loan that will only need to be paid if you decide to move, refinance, or finish paying your mortgage before a certain number of years have passed.

DPA grants

Grants don’t have to be repaid and can be available through local or state government. Check with them for details of programs you might qualify for.

Nonprofit buyer programs

Some charities and nonprofits offer help to low or moderate-income buyers. They can provide financial and educational assistance if you meet their income requirements.

Habitat for Humanity and Neighborhood Assistance Corporation of America (NACA) are two nonprofits that work with lower-income families to help them find a home. There is a list of approved nonprofits on the HUD website for every state.

Good neighbor next door

If you are a teacher, EMT, police officer, or firefighter, the Good Neighbor Next Door program could get you a big discount on a home. You might be able to get 50% off certain HUD properties that were foreclosures.

HomePath ready buyer

Fannie Mae offers this option to buy a foreclosed property. HomePath allows down payments of 3%, and you could get up to 3% of your closing costs back.
These homes are sold as-is, so if you don’t mind the possibility of doing some repairs, this first-time buyer program could be for you.

Employer-sponsored programs

Some employers have incentive programs to help their employees with the costs of buying a home. These programs are often joint arrangements with state governments. Check with your HR representative to find out if you could get help with down payments or closing costs.

Student grants and loans

Getting a mortgage when you have school loans can be difficult. FHA and VA loan programs can be more flexible to allow you to manage both repayments and easier to qualify for.
Your state might also offer first-time buyer assistance for students. If you have loans or have recently graduated, some programs will reduce the interest rate or help with the down payments.

Final thoughts

The cost of becoming a first-time buyer need not be as big a problem as it first appears. With many options to help cut costs and make buying your first home more accessible, ownership doesn’t necessarily have to wait for you to save a down payment.

Getting the best mortgage for your needs takes a bit of research and patience.

With many possible options, make sure you find out about all the programs and loans you could qualify for.
Bill Gassett is a nationally recognized real estate leader who has been helping people buy and sell MetroWest Massachusetts real estate for the past 35 years.