HUD First-Time Home Buyers Programs
The Department of Housing and Urban Development (HUD) has several first-time home buyer programs that extend home ownership opportunities to households that would not typically qualify for a loan. HUD also offers assistance with down payment and closing costs to qualified first-time home buyers. Anyone who hasn't purchased a home within three years prior to submitting an application is considered a first-time home buyer. Many first-time home buyer programs can be used in conjunction with one another.
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Federal Housing Administration (FHA) Loan
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Home loans insured through the FHA program are the easiest loan product for a borrower to qualify for. The ease of obtaining a home loan is what attracts first-time home buyers to the FHA program. The credit requirements are in the mid 600s as compared to a conventional loan which requires a 720 credit score. FHA-insured loans are also less stringent on down payment requirements. You will need 3.5 percent of the home's purchase price as a down payment. Loans can be obtained through FHA-approved lenders.
FHA 203(k) Rehab Loan
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The FHA 203(k) rehab loan is for first-time home buyers who want to purchase a home that needs rehabilitation. This program for first-time home buyers consolidates acquisition, construction and permanent financing loans into one mortgage. There is a $5,000 minimum of repairs required to be approved for the loan. The applicant will still need to qualify under FHA credit and down payment requirements. This program is only for home buyers who intend on occupying the property.
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American Dream Downpayment Initiative (ADDI)
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The ADDI program loans first-time home buyers up to $10,000 to go toward a down payment and closing costs for the purchase of a home. The funds can be used for the purchase of properties with one to four units. Home buyers must also meet income eligibility requirements. The applicant's income cannot exceed 80 percent of the area median income. Local state agencies provide ADDI assistance to qualified home buyers.
Home Ownership for Public Housing Residents
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The Home Ownership program is administered through local housing authorities. The program allows eligible residents of public housing or Section 8 housing assistance-payment participants to purchase a home. Under this program, a housing assistance voucher payment can be used toward a mortgage. A voucher is the subsidized portion of rent paid by the government. To be eligible for the program, the home buyer must have consistent employment history and meet credit minimum requirements. The home buyer will be responsible for choosing an approved lender and qualifying for a loan. Also, the housing authority may require a home buyer counseling workshop certificate of completion as a condition of converting rental payments to a mortgage payment.
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References
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