First Time Home Buyer Dallas TX

Why Government backed mortgages are the best for first time homebuyer

The biggest challenge that you struggle with when buying a home for the first time is the amount that you’re required to put down and the rates at which the loans are offered. Most first time home buyer in Dallas have not saved for this purpose or whatever they have is not enough for a down payment. If you find yourself in this situation, you must start contemplating about the government backed mortgages. There’re three main government backed loans: VA, FHA and USDA. This article will explore the reasons why these programs are the best for first time homebuyers in Dallas.

FHA Loan

Federal Housing Administration (FHA) backs a mortgage that is made by approved lenders. The mortgage requires a low down payment amounts, low scores and accepts applicants with imperfect credit history. There are various perks of this mortgage that makes it one of the best programs for first time homebuyers. These include:

Low down payment-The amount that you’re required to put down is low when you’re applying for an FHA loan. You’ll be required to put down 3.5% of the total amount that you’re borrowing. This amount is very low compared to the mount that you’ll put down when applying for a conventional loan. Additionally, in case you lack or don’t have enough down payment amounts, the program recognizes gift funds from friends, relatives, colleagues and specific institutions.
Competitive rates-First time homebuyers may not have enough incomes to afford an expensive loan. The FHA loan is insured by the government through Housing and Urban Administration. In case you default on loan repayment, FHA will compensate the concerned lender. This backing acts as an incentive for lenders to offer the loan at low rates. You need to shop around to find competitive rates in the market. The low interest rates makes the program affordable to many US citizens.
Relaxed credit score and history requirements– The FHA loan is flexible in terms of credit scores compared to conventional mortgages. The loan also accommodates people with imperfect credit history.

USDA Loan

The USDA loan targets residents of rural areas of the US. The loan is aimed at supporting the majority of the US population. This is the reason why USDA has redefined the term rural to includes such places like small towns and outskirts of metropolitan areas. The USDA loan has various attributes that make it an ideal option for many first time home buyer programs Dallas. These include:

zero down payment amount– When you’re applying for this loan, you don’t need to put any amount down. The mortgage is fully guaranteed by USDA and in case you default on repayment, USDA will compensate the lender.