Whether you are moving out of your parents’ house or want to become rent-free, there are several helpful options for first-time buyers. Income, geographic location, and military status are substantial factors in the home ownership process, and may qualify you for cost-saving programs and other benefits.
If you’ve previously owned or foreclosed on a home, you may also be eligible, due to record-low interest rates, loan options, and other advantages. To find out if you meet first-time home buyer criteria, review the following conditions outlined by the U.S. Department of Housing and Urban Development (HUD).
Learn more about first-time home buyer incentives, such as government-backed loans and grants, tax credits and exemptions, special financing, and more.
1.) Government-Backed Loans
First-time home buyers are eligible for various government-supported loans offered through the Federal Housing Administration (FHA), U.S. Department of Agriculture (USDA), and Veterans Affairs (VA) for U.S. military personnel. When deciding which loan is best, it’s important to contact a Contour Mortgage representative.
Most of these options divert from the standard 20 percent down payment, with as little as 3.5 to 5 percent acceptable—or nothing at all.
While they have unique terms, each similarly offers closing cost assistance, bad credit or foreclosure forgiveness, and quick approvals.
Borrowers must ensure pre-approval prior to application. This is also expected by sellers and realtors, due to the current competitive housing market.
Government agencies such as HUD don’t provide actual grant money to first-time buyers. They instead set aside specific fundings to tax-exempt organizations. To learn more about these programs, visit the HUD website for qualifications and requirements.
Some states also offer first-timer grants for both home purchases and improvement projects.
3.) Down Payment & Closing Costs
Aside from the previously mentioned FHA, USDA and VA loans, there are other down payment and closing cost assistance programs for first-timers in specific occupational categories such as teachers, law enforcement, or first responders.
Note additional stipulations could apply, such as income requirements, geographic location, and purchase price limitations. Some also require home-buyer education classes prior to application.
Contact a Contour Mortgage representative to assist with navigating these programs. It’s also prudent to check your state and local government websites for requirements, options, and guidelines.
4.) Tax Credits & Exemptions
First-time buyers can enjoy property tax credits and accrued mortgage interest. These can also be applied toward home improvement projects, or placed in escrow for upcoming mortgage payments.
Those purchasing or constructing a home within 120 days of mortgage approvals can make early withdrawals of up to $10,000 from their traditional IRA without a 10-percent penalty. Required federal and state taxes will still apply, so check with your financial advisor or contact a Contour Mortgage representative.
Roth IRA holders won’t be penalized or taxed if they have been an account holder for at least five calendar years, and the withdrawal doesn’t exceed yearly contributions.
5.) Financial Freedom & Equity
Some of the most important first-timer benefits include financial freedom and equity growth. Unlike renting, there’s pride of ownership, and the opportunity to design and personalize your own space.
Other perks include tax benefits, sense of community, and long-term stability.
Achieving Your Dream Home
With many available options for first-time buyers, it’s best to contact a Contour Mortgage representative for professional guidance.