First-Time Homebuyer Programs That Can Help You

If you’re a first-time buyer, consider using these mortgage loan programs.

Which mortgage loan programs are available for first-time homebuyers? Today I’ve invited Ken Pitts of First Choice Mortgage advisors to join my video blog to answer that question. According to Ken, all loan programs are either government-back programs or conventional programs—both of which have options for first-time buyers.

One of the most common government programs you’ll see is the FHA loan. This program offers a couple of key advantages in that it requires a low down payment (3.5%) and will take lower credit scores. If you’re a veteran, Ken encourages you to take advantage of your VA benefits and use a VA loan, as this loan requires no mortgage insurance. You’ll be able to qualify for more and have a lower monthly payment. If you live in a rural area, the USDA loan is another great government program you can utilize. 

Pennsylvania also offers the Pennsylvania Housing Finance Agency (PHFA) loan, which is a bond-issued program that can give you lower interest rates and be used in conjunction with a government program or conventional program. Additionally, the state offers a grant program through the PHFA that assists you with down payment and closing costs for up to $8,000. If you’re physically handicapped, you can get additional money to retrofit your home.

"All loan programs are either government-back programs or conventional programs.”

When it comes to conventional loans, you’ll hear the terms ‘Fannie Mae’ and ‘Freddie Mac’ thrown around a lot, and these federally backed home mortgage companies offer two 3% down programs you should know about: HomeReady and HomePossible. Both of these programs are income-restricted—meaning you have to meet an income requirement to qualify—but their mortgage insurance is cheaper than what you’d see with a 5% down program.

On top of that, some banks will offer Community Reinvestment Act (CRA) loans. Banks are encouraged by the federal government to lend money in low-income areas, and these loans are income-restricted as well. Oftentimes, the bank versions of these programs have no mortgage insurance at all, which reduces your monthly payment and increases your buying power. 

If you’d like to know more about buying a home in Lancaster County, check out my website, subscribe to my YouTube channel, or reach out to me directly. I’d love to help you.