As a first-time homebuyer, you will be glad to know that there are several first-time homebuyer programs in Hawaii available that were designed to help make the home buying process easier for you. Here is a look at some of the first-time homebuyer programs that you might want to explore when purchasing a home.
Fannie Mae’s HomeReady Loan Program
Fannie Mae is a government-sponsored entity that works with local lenders to offer a variety of mortgage loan opportunities. For first-time homebuyers, this is accomplished through the HomeReady Loan program. This program offers relaxed lending guidelines for first-time homebuyers, though its other benefits apply to new buyers as well as those who have owned a home before. Through this program, you can qualify for a down payment of as little as 3 percent. The program also helps you qualify for reduced Private Mortgage Insurance and a lower rate if you are putting down less than 20 percent. Homebuyer counseling is also included as part of this program.
Freddie Mac’s Home Possible
Like Fannie Mae, Freddie Mac is a government-sponsored entity that works with lenders to provide mortgage loans. Freddie Mac offers the Home Possible Loan program, which provides flexible underwriting that is helpful for first-time homebuyers. The program also offers down payments of as low as 3 percent for both first-time and repeat homebuyers. In addition, so long as one borrower has a FICO score of at least 680, the income of other borrowers can be used to qualify without needing to have a minimum FICO score. The MCC Grant can also be used with a Home Possible Loan to help meet the additional income requirements needed for a first-time buyer to qualify for the loan. Like Fannie Mae, homebuyer counseling is included with this loan program.
FHA loans are home mortgage loans that are backed by the Federal Housing Administration, which is an agency within the U.S. Department of Housing and Urban Development (HUD). FHA loans remove the risk associated with making a loan, thereby allowing lenders to be more lenient about their credit requirements. If your credit score is 580 or higher, you will be eligible for an FHA loan with a down payment as low as 3.5 percent. If your credit score is lower than 580, you may still be approved but will have to pay at least 10 percent toward your down payment. FHA loans generally offer competitive interest rates and have lower closing costs than conventional loans.
A U.S. Department of Agriculture, or USDA, loan can be used when purchasing a home in a rural area. With an USDA loan, you do not need to make a down payment at all. In addition, if you have a credit score of 640 or higher, you will likely qualify for streamlined processing. While you can still qualify for the loan with a score of less than 640, you will likely be asked to provide additional documentation regarding your payment history. Income limitations do apply with USDA loans.
Other programs that could potentially help you with obtaining a mortgage loan as a first-time homebuyer include VA loans, the Energy-Efficient Mortgage (EEM) program, the Good Neighbor Next Door program for teachers and emergency personnel, the Native American Veteran Direct Loan program, the FHA Section 203(k) program for fixer-uppers and other local grants and programs.