Best Loan Programs for First Time Home Buyers

Buying your first home can feel intimidating and overwhelming with all the lending options available. With specific credit scores and down payment requirements, buying your first home may also seem financially out of reach. However, if you’re first time home buyers in Minnesota, you may be eligible for one of the following programs.

Minnesota Housing Start-Up

The Minnesota Start Up for First-Time Homebuyers program makes it easier for first-time homebuyers by offering down payment, closing cost assistance, and affordable interest rates. The program is exclusive to Minnesota residents looking to buy in the state. To qualify for the program, customers also can’t earn over $134,800 per year. 

The state of Minnesota also has other down payment assistance programs available. The Deferred Payment or Deferred Payment Plus loans offer up to $11,000 toward down payment or closing costs. If you qualify for one of these loans, you won’t have to pay the deposit back until you sell or refinance your mortgage. The best way to find out what Minnesota programs you’re eligible for is to contact a mortgage lender for a no-obligation consultation.

FHA Loan

Federal Housing Administration (FHA) loans are designed for first-time homebuyers. When compared to conventional loans, FHA loans have lower down payment requirements. The FHA program requires customers to put just 3.5% down on their mortgage. Requirements for FHA loans include being a first-time homebuyer and having a good credit score. Some customers may qualify for an FHA loan with lower credit, but may also be required to pay a higher down payment.

FHA loans require mortgage insurance, which is a monthly payment that helps protect the lender’s investment. This payment is included in your monthly mortgage payment. Some lenders may remove mortgage insurance requirements after you pay down a certain percentage of your home loan. Other versions of the traditional FHA loan may also be available to customers who want to invest in a fixer-upper. An FHA 203(k) loan falls under the FHA program but allows you to borrow funds to repair and renovate a lower-priced property.

VA Loan

If you or your spouse are active or retired military members, you may qualify for a VA loan. If you’re eligible for a VA loan, you won’t have to put anything down to purchase a home. VA loans also don’t require mortgage insurance, which can result in lower monthly payments. The lending requirements for VA loans tend to be less strict than other loans for first time home buyers. However, specific VA loan program requirements vary, depending on the lender.

Fannie Mae and Freddie Mac Loans

Fannie Mae and Freddie Mac can be great choices for homebuyers who want a conventional first-time homeowners loan. Both offer numerous programs that can help first-time homebuyers obtain their first homeowner’s loan. The Fannie Mae HomeReady program is a great option for low-income, first-time buyers and requires just a 3% down payment. While this program also requires mortgage insurance, you can drop the insurance after earning 20% equity in your home.

Buying your first home doesn’t have to be difficult. First-time homebuyer programs can help you meet down payment requirements and achieve the dream of owning your own home.