A Guide to First-Time Home Buyer Programs, Loans, and Grants

A Guide to First-Time Home Buyer Programs, Loans, and Grants

  • Jen Caskey
  • 06/21/23

You’ve worked hard and saved your money, and now you’re ready to buy a home for the first time. However, the intricacies of buying a home are often very complex and overwhelming. There are so many types of mortgages, banks, and seemingly endless lenders trying to get your attention. However, being a first-time home buyer makes you eligible for many great programs, from down payment assistance to help with closing costs and beyond.

First-time home buyer programs

Down payment assistance

Down payment assistance is one of the most prominent programs available to first-time home buyers. Down payment assistance means the buyer will get a portion of the money required to put down on the home, saving homeowners thousands of dollars depending on the program and the loan amount. A down payment assistance program typically comes as a loan or grant.

DPA loans

DPA loans offer financial assistance to first-time home buyers who need help paying their down payment. It’s important to remember this is a loan; you must pay back the funds you borrow. The loan is usually subsidized by either the federal or state government. Many first-time buyers consider DPA loans to help them get into a home without having to save or come up with more money upfront. However, sit down and ensure you can afford to pay back what you owe. Overextending yourself in loan payments may make it difficult to pay your mortgage or other monthly bills.

DPA grants

A DPA grant, in contrast, is money used as down payment assistance that does not need to be repaid. You will typically qualify for a grant based on the city or county in which you live, your credit score (which will need to be above 620), and your income, which varies by region.

Government-backed loans

Government-backed first-time home buyer loans are subsidized, providing you with a lower interest rate, down payment assistance, or even a lower credit score requirement. Government-backed loans help to stimulate the economy by providing consistent cash flow into the real estate market, banks, and lending institutions. These loans are offered by the federal government, most states, and even some local municipalities.

Tax deductions

Many homeowners will deduct the interest payments they make on their mortgage. To know more about what tax deductions first-time homeowners qualify for, speak with your real estate professional and research reputable sites.

Closing assistance

Typically, first-time home buyers can use their DPA assistance as a loan or a grant to pay 100% of the closing costs.

Home buyer education

There are several free or inexpensive education programs available for first-time homebuyers. These classes will go over the home-buying process, discussing what steps need to be taken and what will be required of the buyer. First-time buyers can typically find these programs through the government or a private lender.

Federal first-time home buyer programs

The federal government has numerous programs to help buyers get into their first homes, and underserved communities find mortgages. 

Government-backed loans

FHA loans

FHA loans are specifically designed to help first-time home buyers afford a home. FHA loans typically require less stringent qualifications, such as a smaller down payment of 3.5% of the purchase price and lower closing costs.

USDA loans

USDA loans allow first-time buyers to purchase a home with zero down. Buyers must meet certain requirements based on income, credit score, and other factors. One of the most critical requirements of the USDA loan is the location. Homes must be located in an eligible rural area to be considered.

Good Neighbor Next Door

The Good Neighbor Next Door program is offered through HUD, the federal housing agency, and helps teachers, firefighters, EMTs, and police officers qualify for up to 50% off the sale price of their homes.

State and local first-time home buyer programs

As Southern California realtors with years of experience helping people get into their first homes, the Jen Caskey Group is proud to say the state of California has many programs in place to help first-time home buyers. Contact the team today to learn more about the options available to you!

Charitable or nonprofit first-time home buyer programs

In addition to state or federal help, first-time home buyers can also contact nonprofit organizations for assistance.

Habitat for Humanity

Habitat for Humanity is a decades-old nonprofit helping people find affordable housing by building their homes and ensuring mortgage payments are within budget.

Neighborhood Assistance Corporation of America

The NACA is a nationwide non-profit assistance program that fights for economic justice by helping underprivileged people into homes and homeowners overcome predatory lending practices.

Employer-sponsored first-time home buyer programs

Many employers, from large corporations to small businesses, also offer first-time home buyer programs to their employees. 

First-time home buyer program FAQs

Who is a first-time home buyer?

A first-time home buyer is just what it sounds like — anyone buying a home for the first time. This definition also means you have never owned a home or been on a mortgage before. In some cases, it can be applied to anyone who hasn’t owned a home in the previous three years.

Who qualifies for first-time home buyer programs?

Virtually anyone buying a home for the first time can qualify for a first-time home buyer program. If you are thinking of purchasing a home for the first time, be prepared to show a lender your credit score, debt-to-income ratio, and income levels. If you’re struggling with one or more of these issues, there are nonprofit organizations that can help work to fix them.

Help is available for first-time buyers

Those who are ready to become first-time buyers have a plethora of options available to assist in their real estate purchases. If you’d like to know more about the options available to you, contact the Jen Caskey Group today, and our team will be happy to help you find the home of your dreams along the Southern California coast. We specialize in Manhattan Beach, Redondo Beach, and Hermosa Beach real estate and have ample experience helping first-time buyers reach their real estate goals.

Work With Us

The Jen Caskey Group can assist you in determining your current property value, crafting a competitive offer, writing and negotiating a contract, and much more. If you're buying or selling real estate in Manhattan Beach, Hermosa Beach, or Redondo Beach, contact us today!

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