If you are trying to choose a type of mortgage to purchase your first home, you might wonder which of the many types of loan options are suitable. To help learn which option may be right for you, let’s go over some types of mortgages that are popular among first time homebuyers.
FHA Loans
FHA loans are so readily associated with first time homebuyers that it is a common mistake to believe that only those shopping for their first homes can use them. FHA mortgages have backing from the Federal Housing Administration. This guarantee on the loan makes it less risky for the lender.
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Why They Are Suited to First Time Homebuyers. FHA loans have a lot of benefits which are particularly suited to those in the market for their first home. For one thing, first time homebuyers usually are at a stage of their financial lives where they are still building up credit and income, and may also have higher debt than those with more established finances. The relaxed qualification requirements for FHA loans may help you get around these issues. The affordable rates and low down payment requirements make FHA mortgages even more attractive to first time homebuyers.
VA Loans
Another type of mortgage that may be right for you as a first time homebuyer is a VA loan. The US Department of Veterans Affairs backs this type of mortgage, reducing risk for the lender in the same way that the FHA does for FHA loans. That means that VA loans offer benefits that are similar to those of FHA mortgages.
Why They Are Suited to First Time Homebuyers. With a VA loan, you could buy a home with relaxed qualification requirements, affordable rates and zero down payment. VA mortgages have an extra affordability benefit for first time homebuyers as well, which is no requirement for PMI.
Conventional Conforming Loans
While government-backed programs like VA and FHA can be exciting opportunities for first time homebuyers, conventional conforming loans should not be overlooked. A conventional conforming loan is not backed by a government agency and fits within the Fannie Mae and Freddie Mac conforming loan limits.
Why They Are Suited to First Time Homebuyers. The qualification requirements for conventional conforming mortgages may not be as relaxed as they are for VA and FHA loans, but interest rates can be affordable and down payments can be low if you meet qualifications. .
Jumbo Loans
Jumbo are non-conforming loans allowing you to borrow beyond the Fannie Mae and Freddie Mac limits. Some people assume they are not really applicable to first time homebuyers, but this is not the case.
Why They Are Suited to First Time Homebuyers.While many homebuyers shopping for their first homes pick a property that is relatively modest, others might be in the market for something more premium. Plus, there are some housing markets where even a relatively modest dwelling can easily require financing surpassing the Fannie Mae and Freddie Mac conforming loan limits.
Buy Your First Home in Boston or Beyond With Style Mortgage
We will go over the pros and cons of different options and guide you through the process. We work with first time homebuyers in Massachusetts, Rhode Island and Connecticut. You can see that many types of mortgages may be suited to a first time home buyer. Need help choosing? Please give us a call at (508) 223-5206 to schedule your consultation.
This information is intended for informational purposes only and is not an offer to lend. All applications are subject to credit approval.
Do you know how much home you can afford?
Most people don’t... Find out in 10 minutes.
Today's Mortgage Rates
