Many first-time homebuyers are unaware of the many lending programs available for their specific situation. As with many home loan programs, loans for first time homebuyers are sponsored by federal, state and private organizations. Why are there loan programs specifically for first time homebuyers? Owning a home and property is part of the American Dream and encouraged by the federal government and society in general. Homeownership also helps support and maintain the national economy.

In order to qualify for a first-time homebuyer loan, you cannot currently own a home you have lived in for three consecutive years.  Certain programs are also designed to bring homeowners into specific residential areas of the country.

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Therefore, interest rates, loan terms and credit requirements are friendlier. Down payments are also lower than in traditional mortgage loans. First time homebuyers also have the ability to withdraw as much as $10,000 from a traditional IRA or Roth account with no penalty. 

What types of first-time homebuyer loans are available?

Fannie Mae and Freddie Mac conventional loans are available for first time homebuyers. The NADL and other VA loans also have programs designed for first time homebuyers.

HUD helps provide down payment assistance through local and state resources. Fannie Mae sponsors the HomePath ReadyBuyer program, which helps educate first time homebuyers about the home owning process. It also pays up to three percent of the closing costs on your first home purchase.

 Additional first-time homebuyer loan programs include:

• U.S. Department of Agriculture (USDA) loans.

• The Good Neighbor Next Door program.

• Energy-Efficient Mortgage (EEM) programs.

• FHA Section 203(k) loans.