First Time Home Buyers Loan Programs

The happiness and excitement of buying a new home, cannot match with any other thing in this world. A home is not only a structure made of bricks and mortar; it means a companion which is a witness to your joyful as well as sad moments. Buying a property is no child's play. It needs a lot of evaluation and assessment, of your desires and financial condition. Everybody wants to buy a home in plush surroundings, but moving up the ladder gradually is very important, to realize the true worth that a house deserves. Owning a home in present times when economy is facing a downturn, is a bit difficult. The recession has brought with itself inflation, job losses, salary cuts, which is preventing people from investing into real estate. Although lending companies have reduced the interest rates, but still the time doesn't seem to be appropriate for buying a property.

Everybody dreams of buying a good, spacious home, but often the poor finances become a hindrance. Those who keep on buying properties often, would still have an idea about the kind of loans to apply for, but a person who has never owned a home, is surely going to get confused and would have to be more alert. To help the first time home buyers, lending companies have come up with some loans, called the first time buyers loans. How different these are from the conventional loans, is what we are going to discuss now.

A first time buyer loan is meant only for those who have never owned a property, or in some cases, also includes those who have not been able to find a property in the last three years, not to forget the divorcees, who can also avail these loans. Though the eligibility criteria set by the FHA (Federal Housing Administration) and now HUD (Housing and Urban Development) are quite strict, but once the application gets approved, the first time home buyers get the following benefits:

• Very low or no down payment.
• Subsidized interest rates.
• Grants offered.
• Forgiving loans.
• Limited fees charged by the lenders.
• Defer payments/ Rescheduling of payments.

For those who are low on budget but still think of buying a home, the first time home buyers loans are the best option. But there are some restrictions that one needs to follow after getting a first time home buyers loan. Firstly, you can't buy any property using this loan. You have to limit your standard to what is permitted for this loan applicants. In other words, you'll have to restrict your home search to the lower or middle strata of the property market. Secondly, you can't rent this home of yours, you'll have to make it as your permanent residence. Also, the property you buy must be in prime condition and without any safety concerns. Another drawback of taking a first time home buyer loan is that it takes a much longer time to recover, as compared to conventional loans.

While first time home buyer loans are beneficial to those who are low on finances and want a lower strata property, but the long time period for which this loan traps a person, is surely a disadvantage. FHA is one of the oldest and largest, single provider of first time home buyers loans but now some private charities like Mennonite Housing, etc also provide such loans. One has to be very careful before applying for a first time home buyer loan and should assess both the pros and cons, because buying a home is a very special event in our lives.