Buying your first home is a big step, but you’re not alone. There are plenty of resources and financial help available for first-time buyers. And being a “first-time homebuyer” doesn’t always mean it’s your very first home purchase. It can also apply if you haven’t owned a home in three years or more.
Newbie Homebuyer Loans and Financial Support
There are many loan programs available to assist first-time homebuyers with down payments and closing costs. Some of these are government-sponsored, while others are provided by charitable organizations. Additionally, there are local and federal tax credits that you may qualify for, along with educational programs to help you make informed decisions.
Down Payment Assistance Loans: usually offer low or no-interest financing. The terms of use and repayment depend on the specific program. These loans may be structured as second mortgages, deferred payment loans, or forgivable loans.
Second mortgage down payment loans are typically repaid alongside your primary home loan. Deferred down payment loans must be paid back when you move, sell the home, refinance it, or pay off the primary mortgage. Forgivable down payment loans usually have a specific timeframe for qualification for forgiveness. If you take any of the listed actions before that timeframe, you’ll be required to repay the loan in full.
Down Payment Assistance Grants: do not require repayment, but the eligibility criteria may vary, so it’s essential to grasp the specifics. Typically, these grants are provided by state and local government entities.
Federal government-backed loans: may occasionally come with no down payment obligations.
Tax deductions and credits: which are typically available to all homebuyers, can also benefit first-time homebuyers. These may include deductions for mortgage interest on both federal and state taxes.
Closing cost assistance: offered by government and charitable organizations, typically ranges from 2% to 6% of the cost of a home loan. This assistance is provided in the form of both grants and loans. Additionally, sellers of the home can contribute to these costs through seller concessions. They may also assist in securing a better interest rate and covering certain taxes.