According to NAR, first time home buyers face more obstacles than repeat buyers and account for 1-in-3 homes sold nationwide. One of the biggest obstacles when purchasing a home is saving for the down payment. The second hurdle potential homeowners faced was poor credit history, making it more difficult when trying to qualify for a mortgage.
With low mortgage rates and low down payment mortgages available, this post is meant to help first time home buyers get their mortgage approved for their first home loan and become successful homeowners.
According to MarketWatch, “First time buyers are vital to boosting sales, especially during downturns, since when they buy a home, they aren’t also selling a previous home to finance the purchase.”
Qualification Requirements For Home Possible Advantage Mortgages
You will need:
- A credit score of atleast 660
- Participate in a qualifying borrower (for first time home buyers) education program like E home.
- Have an annual median income no more than 100 percent of your area’s median income.
Where does money come from?
A first time home buyer may have fewer saving, collections, or student loans. Perhaps the buyers are just starting a career and have no buying experience. How can they purchase if he or she doesn’t save enough for the down payment? Can first time home buyers use gift funds to pay for the down payment? Yes, Freddie Mac Home Possible offers flexibility and can help these new borrowers to realize their dream of homeownership.
Sources of fund
The 3 percent down payment has no specific source requirement and can come from a variety of sources, including gift funds, personal funds, grants and affordable second mortgages.
Freddie Mac home possible benefits first time home buyers in the following ways:
- There is no requirement of minimum contribution from borrower’s personal funds.
- Less income needed to qualify.
- No minimum LTV limit.
- Lower monthly payments
- For down payments; gift from related persons and other sources are acceptable.
How Much Will A New Buyer Have To Pay PMI On Home Possible Advantage Mortgage?
Any mortgage backed by Freddie Mac that accepts less than a 20% down payment requires the borrower to purchase Private Mortgage Insurance (PMI). This protects the lender if you are unable to pay your mortgage loan.
The cost of PMI will depend on your loan-to-value ratio (LTV), which simply refers to what a borrower own on his or her mortgage compared to its value. Once you’ve built equity of at least 20% down payment for your home, you can cancel your PMI and deduct that added cost from your monthly payment.
Get Your Mortgage Quote Now!
If you would like to become a first time home buyer and know more about our current mortgage rates or need a mortgage quote, please call us today, at 954-372-4370.