First Time Home Buyer Programs

Defining First Time Homebuyers

Many existing first time homebuyer programs are not solely designed for buyers who have actually never owned a home. Most programs define a first time homebuyer as someone who has not owned a home for a certain number of years prior to applying for assistance. In this regard, a person might have actually been a homeowner several times throughout the course of his or her life, but as long as the program requirements are met the applicant will still be considered a first time homebuyer. Each program has different requirements, however, so it is important for applicants to understand eligibility requirements prior to applying to any of the many first time homebuyer programs.

Government First Time Homebuyer Programs

Homeowners as consumers are crucial to the economy. For this reason, the U.S. government is eager to enable people to make the leap from renter to homeowner. There are many first time homebuyer programs offered by the government, including The American Dream Downpayment Initiative, a HUD (Department of Housing and Urban Development) program which allocates grant money to each individual state to distribute to eligible first time homebuyers. American Dream Downpayment Initiative (ADDI) funds are available to people who are:

• Considered to have an annual income which falls within ADDI regulations and
• Buying their first home or
• Buying a home after not having owned one for over three years

ADDI money can be used towards a down payment on a home and can additionally be used to pay the closing costs. Homes needing certain repairs, such as the repair of unsafe or unhealthy conditions, can be repaired using ADDI money. Each individual state is responsible for the distribution of ADDI funds, but not every state has money available for all eligible applicants.

Additional HUD Programs

HUD also offers a program of Homeownership Vouchers. These vouchers are offered to first time homebuyers who need more assistance with the monthly expenses of homeownership. A similar program is offered through HUD to renters who meet income and employment qualifications, but this particular program is designed to assist people purchase a home when they would more than likely not have been able to do so without the additional assistance. The goal of this program is to ensure everyone has the option of purchasing a home of their own, even if money is tight.

Lender Programs

It is the best interest of mortgage lending institutions to offer first time homebuyer programs because the programs create more business for the lender. When calling various lending institutions it is a good idea to also inquire as to if the lender offers any special interest rate or other perk for first time home buyers. Although there are mortgage lenders who do not necessarily offer financial advantages to first time homebuyers, many do offer comprehensive educational programs to potential applicants.

These sorts of educational programs are beneficial to borrowers because they are designed to offer a step-by-step guide to the entire process of buying a first home, from the early stages of applying for a loan all the way up to getting the keys at closing.

Beware of Unscrupulous Lenders

Knowing that many first time homebuyers are uneducated regarding the various mortgage products offered, some less-than-scrupulous lenders will label certain piggyback loans and interest only loans as first time homebuyer loans. In truth, the lender is simply taking a somewhat confusing loan and making it look attractive to applicants who may not fully understand what they are getting themselves into.

Buying a home may seem out of reach, but with all the available assistance and educational programs available to first time homebuyers it does not have to be an unattainable goal.