SomeÂ great mortgage programs are available only to first-time homebuyers. But that's not the whole story. Find out here how you too can get access to some of the best home loans.Click to see your low-downpayment loan eligibility (Oct 22nd, 2017)
It may seem odd that repeat buyers can use a first-time homebuyer program to get mortgage financing. But it's often true.
If you think about language, you understand that words often have multiple meanings. That is certainly the case with the term â€śfirst-time home buyer.â€ť
Letâ€™s start with the apparently plain meaning of the expression â€śfirst-time home buyer.â€ť Smith has never been on a real estate title, never had an equity interest in property, and wants to buy a house. Smith is a first-time buyer.
This, however, is not the definition used by most mortgage programs to identify first-time buyers.
The US Department of Housing and Urban Development (HUD) defines a first-time home buyer (FTHB):
Many who don't believe they are eligible for first-timer programs are wrong.
With the VA, the question is not whether you are a first-time buyer, but rather if you are a first-time VA borrower.
The VA says that veterans must pay a funding fee to use the program. The funding fee depends, in part, on whetherÂ you are a first-time or subsequent loan user.
|Type of veteran||Down payment||First-time use||Subsequent use|
|Â Regular military||Â 0%||Â 2.15%||Â 3.30%|
The chart above illustrates how the size of your down payment, and your status as a borrower make a big difference in what you pay.
With USDA rural development mortgages, the approach is similar to the FHA.
According to the Agriculture Department, a first-time home buyer isÂ anyone who hasn't owned a home in 3 years.
In addition, according to USDA, "A first-time home buyer includes displaced homemakers and single parents even though they might have owned, or resided in a dwelling with a spouse.â€ť
So, again, you actually can be a â€śfirst-timeâ€ť home buyer and yet have owned a property in the past under the USDA definition.
Fannie Mae and Freddie Mac buy huge numbers of mortgages from lenders nationwide. The government-sponsored enterprises buy only loans thatÂ meet certain standards. These home loans are therefore known as â€śconformingâ€ť mortgages.
Both Fannie and Freddie offer special low-down-payment programs for first-timers. But Fannie Mae also offers a 97 percent loan for repeat buyers. And Freddie Mac has one requiring just 5 percent down.
Fannie Mae saysÂ first-time buyers:
With Freddie Mac, the description of a first-time buyer is much the same.
Finally, there are special programs sponsored by local governments offering assistance with down payments and closing costs. They are usually available only to first-timers, with one exception: if you buy in a "redevelopment area," you can often get this help if you're a repeat buyer or even buying investment property.
The question that comes up is why do mortgage programs often have a three-year standard for determining who is a â€śfirst-timeâ€ť buyer.
The answer is that some degree of flexibility is built into the system as a way to balance the incentives for first-time home buyers and the realities of modern life. If someone is married, buys a home with a spouse, and later gets divorced, we want to help them both re-start their lives.
The three-year non-ownership period is a way to say that help is available when things donâ€™t quite turn out as planned.
Today's mortgage rates have changed very little from those earlier in the week. To get the best available rate, it's important to compare several quotes from competing mortgage lenders.Click to see your low-downpayment loan eligibility (Oct 22nd, 2017)
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
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2017 Conforming, FHA, & VA Loan Limits
Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)