This can be a really exciting and scary time! I still remember walking out of our closing on our first home many years ago – we got in the car and looked at each other and were so excited!! Scared, but really thrilled to have our own home!
This is a wonderful time to buy a home – especially your first home. Rates are great, home prices are lower than they have been in years. A couple of years ago it was almost impossible to find a single family home under $200,000; now there are many of them.
First time homebuyers have several programs that are available to them. There are FHA loans requiring a minimum of 3.5% down, rural develoment loans for those outside the metro area, first time homebuyer loans with Minnesota Housing and several different conventional loans.
FHA has been a standard loan available for years. You can get a gift from family members to help with the down payment and the seller can help pay closing costs. Credit is a little more flexible than a conventional loan.
Conventional loans are available with as little as 3% down depending on where you are buying. Right now there are several areas that mortgage insurance companies are defining as "declining markets" and those areas may require 5-10% down. However, if you use a program such as Home Possible or My Community, you can also get gift money from family members to use towards the down payment.
VA loans are available to those that have served in the military. These loans are available with zero down and the seller can help with closing costs.
Minnesota Housing has a couple of programs that can help depending on your income. They offer down payment assistance from $3000 to as much as $14,999 with the Home Help program. Some cities and counties offer down payment assistance to those buying in the area. City Living is another program that offers some grant money to those buying in Minneapolis or St Paul. Most of these programs have income limits and home purchase price limits.
If you are buying outside the metro area, you can use the Rural Development Loan which is still zero down. You must be buying in an area that qualifies, but the very southern part of Dakota and Scott counties qualify and most of Goodhue and Rice Counties. Areas in Carver County also qualify. The seller can also help with the closing costs on this program.
If you are thinking about buying and not sure where to start, meet with a loan officer to discuss programs that are available to you. We can explain the different programs and what might work best for your situation. It is also easy to call a loan officer and ask questions, we can usually give you a lot of information over the phone so that you can decide what is best for you.
