Yes, You Can Buy A Home; It’s Not Entirely Impossible!
The real estate market over the past few years has been turbulent, and renters may be a bit wary when it comes to making the transition from renting to owning. The fact is, though, that this is a good time to make that move. First time home buyer assistance programs that have historically been available to first-time buyers are still available. When you combine available assistance for first time buyers with low prices and low interest rates, it’s a buyer’s market. Usually, prices are high and interest rates are low, or it’s just the opposite.
As part of the federal government’s economic stimulus package, first-time buyers can qualify for a one-time tax credit amounting to 10% of the purchase price of their home, up to a maximum of $8,000 provided that they buy this year. Unlike previous credits for first-timers, this credit does not have to be repaid.
In order to qualify for first time home buyer assistance programs, home buyers must meet certain income requirements – a single person must have an income of $75,000 or lower. Married couples must have a combined income of $150,000 or lower. People who earn more can still qualify for reduced credits.
In addition to this credit, there are also programs available through the FHA. The FHA does not make first time home buyer loans directly to individuals. Rather, it insures loans that are acquired through private lenders, protecting the lender if the homeowner should default on the loan. Typically, FHA-backed first time home buyer loans have less strict credit requirements, and will permit buyers to use gifts of money from family members, non-profits or employers for their down payment.
The economic downturn has resulted in a few changes to first time home buyer assistance programs. The United States Department of Housing and Urban Development (HUD) has raised its required down payment to 3.5%, up from 3%. However, that’s still considerably lower than what a first-time buyer would have to pay on a conventional loan (20%).
Additionally, several first time buyer assistance programs now require a higher credit score. It might be possible to get an FHA first time home buyer loan with a credit score under 700, but a higher down payment would likely be required. Private lenders who aren’t FHA-affiliated are likely to expect a credit score of over 700.
Often, first time buyer assistance programs will require applicants to complete an education component that delivers advice on clearing up credit problems along with assistance with budgeting. This means that buyers who may not have the requisite credit score may still be able to qualify.
Many first time buyer assistance programs also now require participants to have an income under 80% of the median income for their region. Buyers shouldn’t assume that they don’t meet this qualification – it’s possible to have been above the median income level for your region a few years ago, but below now.
In addition to considering programs that are specifically geared towards first-time buyers in Orange County, California, it’s worthwhile checking out other programs with comparable benefits. As an example, the USDA offers Rural Development Guaranteed Housing options that can provide up to 100% financing for rural homeowners, and the definition of rural is quite flexible – you don’t necessarily have to be living on a farm out in the middle of nowhere. You may qualify for first time buyer assistance programs if you live in an area that has a population of fewer than 20,000 people.
Some first-time buyers may qualify for conventional loans, but buying programs for first-time buyers generally offer better terms, and require lower down payments, so buyers can hold onto their cash.
THE FINAL WORD
In today’s market, it’s very easy to make the transition from renter to first-time home owner. As long as your credit is reasonably good, you’re employed, and you don’t have a history of delinquency, you’ll probably be able to get first time home buyer loans with favorable terms, particularly with all the programs that are available to assist first-time buyers in Orange County, California.
Already At The Step? Then….