PRETTY YOUNG THING

Image credit

Owning a home is a dream come true for most people. However, the price that it comes with poses a challenge for most. The good news is, you don’t require the entire amount to purchase a new home. There are alternative cost-friendly options you can explore. Here are a few:

Apply For a Conventional Mortgage

A standard financing tool option most people use is mortgages. However, mortgages are primarily fixed-rate loans not insured by the federal government. In addition, most mortgages have strict requirements, making them the hardest to qualify for.

Some of the items you require to qualify for a mortgage are:

• High credit score

• Low income to debt ratio

• A hefty downpayment

Mortgages are loans that can be classified into either non-conforming loans or conforming loans. The issuing institution abides by guidelines outlined by government-sponsored enterprises, Freddie Mac and Fannie Mae, for conforming loans.

For non-conforming loans, the lending institution sets and abides by its own set of guidelines.

Federal Housing Administration Loans

The federal government provides an assistance program to first home buyers. If you have a bad credit history, you should consider applying for this loan. The FHA loans target individuals with a credit score below 500. 

All FHA borrowers have to pay an upfront mortgage premium, in addition to monthly mortgage premiums. This option is suitable for those with a steady flow of income.

You can learn more about FHA loans of the fha faqs.

VA Loans

As a veteran, your service to the country does not go unrewarded. VA loans are flexible loans for veterans. These loans mainly do not require a downpayment. In addition, the requirements are more flexible compared to conventional loans.

It would be best to consult the U.S Department of Veterans Affairs to determine eligibility.

Seller Financing

You can purchase your home without seeking outside financing. Seller financing is preferred. Suppose you cannot qualify for other loan options; seller financing is a viable option to explore. You can negotiate for a flexible payment plan with a home seller. 

Seller financing does not offer competitive interest rates like most lending institutions. However, this is the most flexible option for people with a poor credit history.

Specialty Programs

Aside from conventional financing sources, there are many specialty programs for novice homebuyers:

IRAs

As a first home buyer, you are eligible to take up to 10% out of your retirement account. You will not be charged the 10% penalty for our withdrawal if you intend to purchase a home.

If you have had a Roth account for five years, you can withdraw more than $10,000.

Down Payment Assistance Programs

Most states assist with a down payment through various programs. These programs mainly target public servants and individuals with low incomes.

ReadyBuyer

This program provides 3% assistance as closing costs when buying a foreclosed property. The only hitch is that FannieMae should own the property. 

Individuals seeking this assistance should undergo a home-buying education course to be eligible.