With rent prices rising, economists at Fannie Mae expect mortgage rates to increase along with home prices in 2022 due to higher inflation, a tightening of monetary policy, and low home inventory. This makes it the perfect time to take advantage of your first-time buyer benefits! But, you may be asking, what benefits do first-time homebuyers have?

Two of the biggest benefits of being a first-time homebuyer are the potential financial assistance programs and more relaxed qualification requirements. For example, you could make a lower down payment or get approved with a lower credit score. First-time home buyer mortgage loans are designed to help regular people get over the initial obstacles to homeownership.

Down payment assistance might give you money towards your down payment and closing costs. It comes in three basic varieties: a non-repayable down payment grant, a forgivable loan, or a deferred payment loan, as well as federal tax credits. 

What are the requirements to qualify for a first-time home buyer loan?

Qualifications required for approval of a loan vary by the type of loan program and even by the lender, but here are some general guidelines:

Conventional loans: For a 3% down payment, you will need at least a 620 FICO and a debt-to-income ratio below 50%. The higher your credit score or, the lower your debt, the better your chances are for approval.

FHA loans: If you want a down payment as low as 3.5%, you’ll need a FICO score of 580 or higher. With 10% down, your required credit score may go as low as 500.

VA Loan:  Down payments aren’t generally required for a loan backed by the Department of Veterans Affairs. And while VA-backed loans don’t have a minimum FICO score as a part of their official requirements, many lenders look for a score of 580 to 620 or better.

USDA loans: Another no-down-payment option, USDA-backed loans are typically issued for rural or suburban properties. Income limits apply. A FICO score of 640 or better is generally required, though exceptions with documentation can allow a lower score.

Lenders can add additional conditions to your loan approval. This is another good reason to get a consultation to understand your finances and the best option for you and your family. Schedule a consultation with my team or me. We can help you navigate these programs and the options available to you.

Thank you for reading.

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