A look at the most attractive financing options for new buyers Over the last few years, many reports, studies, and articles have proclaimed that homeownership is no longer a key part of the American dream. It?s true that millennials are delaying buying homes, but other studies show that younger generations do want to own a home, they just can?t afford it yet. Crossing from renter to owner is a big, expensive step, but there are a variety of mortgage options designed to make this process easier for first-time buyers.
By offering low down payment requirements or flexibility with credit scores, special loan programs are often the key to homeownership for new buyers. Although the research and paperwork can be tedious making the homebuying process hard, finding financing for low- to-moderate, even high-earning, borrowers isn?t quite that complicated. Here are five programs first-time borrowers should know about when shopping for a new home.
Traditional FHA
The Federal Housing Administration (FHA) insures loans so that lenders can offer first-time homebuyers better deals. The FHA allows a down payment of 3.5 percent?significantly less than the typical 10 to 25 percent. Whitney Fite, president of Angel Oak Home Loans, a retail mortgage lender, points out that the FHA is also much more flexible when it comes to to credit score requirements. You can get an FHA loan with a credit score as low as 500, but you?ll be required to make a downpayment of at least 10 percent.
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