First Time Home-buyers
Bank of the Commonwealth Mortgage offers a variety of special programs for the First Time Home-buyer. These programs are designed to ease the transition for those borrowers who will be purchasing residential real estate for the first time. The following loans are a sample of the types of loans that Bank of the Commonwealth Mortgage offers to First Time Homebuyers:
Fannie Mae “MY COMMUNITY” Programs
Under the Fannie Mae “MyCommunity” program, lenders can help an individual, who otherwise could not purchase a home, qualify for a home loan based on all income and credit histories maintained by the individual. This program targets people with unusual income sources such as rent from relatives of nonrelatives and those who can show they handle credit responsibly through regular bill payment. “MyCommunity” will even help the individual with limited savings, without a traditional credit history and, of course, with atypical income sources afford to buy or refinance a home. Specialty programs exist for public service employees and the disabled.
Fannie Mae: Affordable Home Programs
Through its relationships with housing partners and lenders, Fannie Mae can offer a wide range of affordable home programs. In the effort to support community development, through these programs, Fannie Mae is able to help qualify individuals for mortgages, in turn, building equity wealth for the community. Focusing on low- and moderate-income borrowers, minorities, urban and rural residents and people with special housing needs, Fannie Mae hopes to bridge the homeownership gap in the United States with the implementation of affordable home programs and making the homeownership dream a reality for the overlooked and underserved in this country.
Veterans Administration (VA Loans)
Veterans Administration Loans, otherwise known as VA Loans, are available to a select group of first time homebuyers and are guaranteed by the U. S. Department of Veterans Affairs. This select group includes Veterans of the Armed Services, individuals who are currently on Active Duty or in the Reserve and their spouses. VA Loans offer first time homebuyers the opportunity to purchase a home with no down payment and favorable loan terms with both fixed-rate and adjustable rate options. VA Loans can be easier to qualify for than conventional loans, helping more Veterans become homeowners.
Benefits of VA Loans
- In many cases, there is no down payment required with a VA loan.
- There is also no monthly mortgage insurance premium involved.
- VA loans are assumable, and therefore subject to the VA approval of the assumer.
- There is a maximum loan guarantee, which is currently set at $417,000 with no limit on the home purchase price.
Federal Housing Administration Loans (FHA Loans)
Federal Housing Administration (FHA) Loans are available to all qualified first time homebuyers. FHA Loans provide the borrower with the opportunity to purchase a home with little or no down payment. Furthermore, these loans maintain special guidelines that allow more borrowers to qualify for a home loan. FHA’s mortgage insurance programs assist low and moderate income families in becoming home owners by reducing some of the costs of their mortgage loans. Additionally, FHA mortgage insurance encourages lenders to make loans to otherwise credit worthy borrowers who might not be able to meet conventional underwriting guidelines. Finally, FHA mortgage insurance provides the lender with protection against loan default on mortgages for certain properties that meet certain minimum requirements.
Benefits of FHA Loans
- The down payment requirements on a FHA loan can be as low as 2.25% since FHA insurance allows borrowers to finance approximately 97.75% of the value of the home being purchased.
- An FHA loan requires a 3% statutory investment which equals a payment and can include borrower paid closing costs.
- Anyone intending to use the mortgage property as a primary residence is eligible to apply.
- Generally, an FHA loan is more flexible than conventional loans in credit qualifying and guidelines.
Advantages and Disadvantages of First Time Home-buyer Loans with the VA and FHA
There are certain advantages and disadvantages that exist when comparing the aforementioned loans to other loans in the commercial marketplace. VA and FHA loans may be easier to qualify for when compared to other loans in the commercial marketplace, depending on the borrower’s particular circumstances. Additionally, the VA and FHA loans may be able to offer a lower interest rate than some of the other loans available. VA and FHA loans used to offer a lower down payment than other types of loans, however, due to the wide array of loan programs available today, many borrowers can qualify for loans in the commercial marketplace that require no down payment at all. One of the disadvantages of the VA and FHA loans is that borrowers may be subject to both property value and income limitations. Finally, certain first time homebuyer programs which incorporate government subsidies may implement a recapture tax if the home that buyer purchases is sold too soon. Contact one of our mortgage loan specialists today in order to learn more about these and many other exciting loan programs.
