Federal Aid for First Time Home Buyers

Finding a loan company to finance a new mortgage is something that should be approached with a lot of caution. There are many different mortgage companies out there, but not all of them have your best interests at heart. In a time where the housing market is still struggling to recover, many first time home buyers are looking into federal aid programs designed to make the first time loan acquisition process a lot easier. What are these programs and are any of them still available? Can the government help me to buy a new home? What if I have a bad credit rating? Within this article we will attempt to answer these and other questions.

An example of a federal aid program for first time home buyers

In 2008, Obama created a federal aid program that provided tax credit for first time home buyers as an incentive to renew faith in the stumbling housing market. This original federal aid program was extended every year with several or more modifications until September 2010. Many people thought that there would be another extension for 2011, but unfortunately for some there was not. As the housing market slowly began to recover, the US government felt it was unnecessary to focus on further tax credit programs for first time home buyers and shifted attention to other concerns.

How the government can help first time home buyers

First time home buyers are often advised to acquire a loan from government agencies like the Federal Housing Association (the FHA). The FHA makes it much easier for individuals to get a loan, and it is possible to acquire a loan with a lower credit rating. People who have a credit rating above 600 should be able to qualify for an FHA-insured loan, while many other loan companies require a score at least above 720. Additionally, FHA-insured loans often require much smaller down payments (typically 1.5% of the total loan amount). If you don't have a lot of money available to make an upfront payment, you will still have to fork out the 1.5%, which should not be too difficult.

Your next steps for home buying federal aid

Federal aid for first time home buyers is still out there and is still available, even though the original tax credit programs no longer apply. By purchasing a mortgage insured by the FHA, first time home buyers can save money that would have otherwise been spent on private insurance and private loans from specialized mortgage companies. There are many different banks and companies that offer FHA-insured mortgages, so take some time to look around and do some additional research on the FHA to find the most appropriate plan for your situation.