First Time Home Buyer Loans

First-time home buyers have several good options for financing their purchase. The right choice will depend primarily on the buyer's financial position and credit history. Those with good credit and an adequate down payment can qualify for a conventional 30- or 15-year mortgage. For those with less than perfect credit, there are a number of programs that can assist in obtaining a loan with little money down and limited income available for monthly payments.

Home Mortgages Programs

Most mortgage programs include 30- and 15-year fixed-rate terms as an option. These are, in fact, the most common terms for all home loans, including FHA and VA loans. Another possibility is the adjustable rate mortgage, or ARM. This loan starts out with a lower introductory rate for a specified time period. The rate is then adjusted based on a preselected index. A variable rate means that there is a chance that a borrower's monthly payment could increase.

FHA loans are popular with first-time home buyers, mainly because they are underwritten by the Federal government for the purpose of helping lower-income people purchase a home. FHA loans allow borrowers to put less money down, and also to finance some of the loan fees. They are available to those with damaged credit, as well. Anyone with a limited amount of up-front money seeking a relatively small mortgage amount may qualify for this type of loan.

First-time home buyers need special consideration when seeking a mortgage. Many do not qualify for conventional loans because they cannot make the 20 percent down payment necessary to buy a home with no mortgage insurance. Getting a first-time home loan can be the first step toward building the credit and equity needed to shape a brighter financial future.