Mortgage Loans

First Time Home Buyer


First Time Home Buyers

If you have never owned a home, or have not owned a home in the last three years, you may be able to take advantage of the first time home buyer mortgage loan and tax credit program.

First Time Home Buyer Mortgage Loans

The most common first time home buyer mortgage is one that is insured by FHA. The benefit using an FHA mortgage when you buy a home is the low down payment, plus the credit and income qualifying can be easier than a conventional loan. Here are the program highlights:  

  • Down payment as low as 3.5% of purchase price on a home purchase
  • Flexible FHAmortgage loan guidelines provide for lower credit scores
  • Higher debt ratios allow home buyers to qualify with less income
  • A non-occupant co-borrower can help a home buyer qualify for a loan
  • Certain mortgage closing costs have limitations which are set by FHA
  • A previous bankruptcy only needs to be discharged for two years
  • Less cash reserves make it easier for a first time home buyer to qualify
  • FHA allows all or part of the down payment to be a gift from close relatives

When buying your first home, also remember to budget enough money for closing costs and setting up an impound account. Your mortgage loan includes a Good Faith Estimate itemizing the costs due at the close of escrow.  An impound account is money collected at closing, and along with your monthly mortgage payment, held in reserve for property taxes and homeowners insurance.

You can try to save money by having your real estate agent ask the seller to pay all or part of your costs when a purchase offer is submitted. A first time home buyer mortgage through FHA allows the seller to pay up to 6% of the home purchase price to be credited to the buyer’s costs.

Firsr Time Home Buyer Tax Credit

As a qualified first time home buyer, you can receive a tax credit up to $8,000 when you buy a an owner occupied home. To qualify, you have to buy your home by December 1st 2009, in addition to certain other requirements for the first time home buyer tax credit.

  • Any home that will be used as a principal residence qualifies for the tax credit
  • The first time buyer credit is not a loan, and does not have to be repaid
  • The tax credit is equal to 10% of the purchase price of a home up to $8,000
  • The credit is available for new or resale homes purchased before December 1, 2009
  • Must remain principal residence for 3 years or face recapture of the tax credit amount
  • First time home buyer single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 may qualify for the tax credit