Loans for First-time Homebuyers: A Short Guide

Here at Altitude Home Loans, we aim to help you find your dream home. Call us today at 520-500-1010 to speak with our mortgage experts.

If you are one of the many Americans seeking a loan for your first home, the process may seem daunting. Thankfully, getting loans for first-time homebuyers is one of our primary missions at Altitude Home Loans. The home purchasing officers in Tucson from Altitude Home Loans can guide you through the process from start to finish.

What Is a First-time Homebuyer?

Even if you’ve owned a home in the past, you can still meet the criteria for a first-time buyer. The rules state that you qualify as a first-time homebuyer if you haven’t owned a qualifying home in the past three years. That said, there are a few caveats.

To qualify as a first-time buyer, you can’t currently own investment property, but you can own property that isn’t up to code. Also, if you’ve owned property with a spouse before divorce, you may qualify.

Types of Mortgages

Conventional

Conforming conventional mortgages abide by the rules of government-sponsored entities (GSEs) like Freddie Mac and Fannie Mae. GSEs don’t issue loans but guarantee loans from institutions that meet their guidelines.

Conforming conventional loans sometimes require more substantial down payments, charge a larger monthly mortgage payment, and are harder to qualify for in general. These loans are often fixed. For 2022, the maximum loan amount is $647,200.

With nonconforming conventional loans, the specific lender sets its loan guidelines.

Floating

Floating loans include adjustable-rate mortgages. They offer low introductory interest rates for more manageable initial payments. A floating-rate mortgage payment can increase substantially after a set period.

Fixed-rate

The interest rate doesn’t change during the loan term of a fixed-rate mortgage, which can bode well for the homeowner if the initial interest rate is low.

Mortgage Programs for First-time Homebuyers

HUD-FHA

The Federal Housing Administration (FHA) is a division of the Department of Housing and Urban Development. Mortgage loans from the FHA have looser credit requirements and offer down payments as low as 3.5%, as opposed to 20%.

VA Loans

The United States Department of Veterans Affairs (VA) backs loans from lenders who meet their guidelines. If you qualify, no down payment may be required.

USDA

Backed by the U.S. Department of Agriculture (USDA), these loans go to low-income rural residents. The USDA can guarantee loans with very low down payments. They also offer direct loans with interest rates as low as 1%.

Special Loan Programs

Down Payment Assistance

HUD maintains lists of state agencies that help with down payments. Certain groups like low-income people often qualify. To see whether you are eligible, contact your specific state agency.

People can use up to $10,000 of their IRA (whether traditional or Roth) for down payments, although Roth owners need to have had an account for at least five years.At Altitude Home Loans, we work hard to mitigate the mistakes of first-time homebuyers. Call us now at 520-500-1010 to secure the right mortgage for your needs.