Before applying for a first-time mortgage, you must take the time to learn more about the eligibility requirements surrounding each of these homebuyer programs. Not only will you be better equipped to choose the program that benefits you and your family best, but being prepared will save you time when you apply for a loan and purchase your first home.
First time home buyer program eligibility requirements vary significantly from one program to the next, but common eligibility requirements include:
- Creditworthiness
- Income-based eligibility requirements
- That you are a first time home buyer or that you have not purchased a home in a specified amount of time
- That you are purchasing a home for your primary residence
- Location-based requirements
- Down payment minimum requirements
- Employment-based requirements
Here’s a closer look at eligibility requirements for the most extensive first time home buyer programs in the United States:
FHA Loans: To qualify for an FHA loan, you must meet minimum credit score eligibility requirements. If your credit score is at least 580, you can be eligible for a low down payment option where you can put down as little as 3.5 percent. However, you will still be required to make mortgage insurance premiums when putting down a lower down payment. Additionally, you may still need to satisfy other eligibility criteria, including having continuous employment for at least two years and debt-to-income ratio requirements.
USDA Loans: USDA loans are a first-time homebuyer program aimed to help low-income borrowers become homeowners. As a result, most USDA loans require you to meet income-based qualifications. Additionally, you must be purchasing a home in a qualifying rural area. While these loans can reduce creditworthiness requirements with a lender, you will still need to meet minimum credit scores. For example, most lenders require you to have at least a 640 credit score to qualify for a USDA loan.
VA loans: While first-time VA home buyer loans are a fantastic option for first-time homebuyers, these loans are only available to borrowers who meet military-based eligibility requirements. You may qualify for a VA loan If you are:
- An active-duty service member who has served for at least 90 consecutive days
- A Reserve or National Guard member with at least six years of honorable service
- A veteran who served continuously for at least 90 to 181 days
- An un-remarried surviving spouse of a service member or veteran who died from a service-related incident or died in the line of duty
With a VA loan, you will not be required to make a down payment or make mortgage insurance premiums. However, you must choose a lender that is qualified for this type of loan. Additionally, you will need to meet lender-based requirements, such as creditworthiness, debt-to-income ratio, and income-based qualifications.
