FHA 1ST Times Home Buyer loan

1st time home buyer loans

Usually what many first time home buyers are most concerned with is what will be the down payment on a home loan. Other factors that can be concerns of first time home buyers are credit requirements and debt-to-income ratio . I will discuss some of the better options for first time home buyers in San Diego with this article.

Conventional low down payment options for first time home buyers:

  • 3% down is the minimum down payment for a conventional home loan. But unless you have top notch credit the monthly mortgage insurance (link) can be fairly high. Also the debt-to-income ratio limits are 45% which can be tight for some first time home buyers in San Diego. There are options to receive the 3% down as a gift from a relative.
  • 5% down is a better option for a conventional loan for a first time home buyer if they can swing the 5% down. 5% down with a top credit score can give you a much lower monthly mortgage insurance payment then FHA.
  • The max loan amount with 3% or 5% down with a conventional loan is $417, 000.

FHA low down payment options for first time home buyers:

  • The minimum down payment for a FHA home loan is 3.5%. 100% of this down payment can be a gift from a relative.
  • FHA has the most liberal credit requirement s only requiring a minimum of a 580 credit score with 3.5% down
  • FHA has the highest mortgage insurance of all the first time home buyer options but also carries a lower 30 year fixed interest rate than conventional financing with 3 or 5% down. It can also be easier for the lender to cover the first time home buyers closing costs with a FHA home loan.
  • FHA interest rates are less credit score driven then conventional home loans
  • FHA home loans allow a non-occupant co-borrower. So if you have a relative that can help you qualify they don’t have to live in the property
  • FHA has a more liberal debt-to-income ratio requirement at 55% vs. 45% with conventional home loans
  • FHA home loans go up to $729, 750 in many parts of the state of California.

VA NO down payment for veterans and active military

  • The very best first time home loan available is for veterans, active military and reservists. This is the VA home loan. If you qualify, this loan can beat out conventional or FHA financing.
  • VA requires zero down payment to $500, 000 in San Diego County and $668, 250 in Orange County and LA County. Buyers can go above this limit with a small amount down.
  • VA home loans have no monthly mortgage insurance and very low 30 year fixed interest rates.
  • VA waives the VA funding fee for veterans that receive VA disability pay.

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