Purchasing your first home is a significant milestone, and you should be congratulated as you embark on this new adventure! For most people, a home is the most significant financial investment they’ll ever make, but you shouldn’t let that fact intimidate you! You are not on your own. Gordon Wang, a top Los Angeles real estate agent, confidently guides first-time home buyers through the process.
Types Of First-Time Home Buyer Programs
When you purchase a home, you’ll be expected to pay a portion of the cost upfront. This is called a down payment, which can be a substantial amount of money. Most first-time home buyers
pay 6% on average, but your specific requirements are impacted by the type of loan you receive. Some resources are available to help you bring down that initial payment.
Down Payment Assistance (DPA)
No less than 2,000 programs operate nationwide to provide Down Payment Assistance, or DPA, and most of these are geared toward the first-time home buyer. Each comes with its own stipulations and qualification requirements, so as you conduct your research, read each detail carefully and ask plenty of questions. DPA programs typically fit into one of two categories:
DPA Loans
DPA Loans are typically localized, and only those in a specific geographic area may apply. They offer low-to-no interest rates and may be utilized for any costs associated with an initial down payment. The DPA loan may also be referred to as a “second mortgage”, as you’ll pay it back concurrently with your original mortgage.
DPA Grants
The key feature that separates DPA grants from DPA loans is the lack of repayment. DPA grant money is yours to keep, and you won’t need to pay it back.
Government-Backed Loans
The
CalHFA loan exists to provide a lower-interest 30-year mortgage to those whose financial status qualifies them for aid. This loan can be utilized for single-family and single units in multi-family complexes and can help finance closing costs.
CalFHA VA loans are available to veteran and active-duty military personnel who are able to provide an eligibility certificate. VA loans can be utilized throughout the service veteran’s life.
The
USDA Program also offers single-family loans for qualified first-time home buyers. This loan is restricted to buyers who are purchasing in select rural areas.
Tax Deductions
Homeownership can help you save during tax season. If you have any of these expenses, be sure to
claim them on your tax returns: mortgage interest, discount points, home office expenses, property taxes, and mortgage insurance. Talk to your accountant to review all the ways you may save.
Closing Assistance
The fees levied at closing can add up quickly. In your contract, ask the seller to cover a portion of the closing fees — a 50/50 split — or more if the seller is open to it.
Additionally, you can talk with your lender about no-closing-cost mortgages, in which the loan is written, potentially at a slightly higher rate, but asks for nothing from you at closing time. This enables you to spread out closing fees across the loan duration, reducing the amount you have to save before purchasing a home.
Home Buyer Education
Education is key to preparing yourself for buying a home. Some loans require you to complete a buyer course to qualify for the loan. The course will answer many of your questions, give you peace of mind about the process, and empower you to navigate this process confidently.
Federal First-Time Home Buyer Programs
California’s statewide programs are not the only options you may want to explore. The federal government also has a variety of loan options that can help you achieve your dream of homeownership.
Government-Backed Loans
Government-backed loans are designed for those who are ready for home ownership but, for some reason, cannot receive a standard mortgage. Banks and lending companies offer these loans and typically mirror California-FHA, VA, and USDA loans.
Good Neighbor Next Door
Specific vital community workers, such as teachers, paramedics, police officers, and firefighters, are able to receive 50% discounts on specific HUD properties.
Charitable Or Nonprofit First-Time Home Buyer Programs
People with lower incomes can take advantage of service organizations designed to help individuals and families with the funds needed to purchase a home. They also offer client education on financial matters to help buyers succeed in their new homes.
Habitat For Humanity
Habitat for Humanity’s work is well-known worldwide, as they have long-provided families in need with a home of their own. Through an extensive volunteer network and by taking no profits from the homes they build, Habitat for Humanity has helped more than 750,000 families move into a home.
Neighborhood Assistance Corporation Of America (NACA)
NACA’s mission is advocacy and education, and they work to help connect lower-income families to lenders and prepare their clients for success at home ownership. A NACA loan does not consider credit scores, and no down payments are required.
The Bottom Line: Help Is Available For Those Buying A Home For The First Time
This list of programs and support networks for first-time home buyers provides a starting point when you are ready to research your options for affordable homeownership. Your number one ally and resource in your home-buying journey is your real estate agent. Reach out to industry professional
Gordon Wang if you have any questions on how to begin your home search.
