Living in a house is a necessity, and every person dreams of one day owning a home of their own. Houses are very expensive and not many people have the ability to pay the full purchase price in one go. The first time homebuyers mostly consist of a newly married couple who are just beginning their marriage and mostly have a moderate income.
The Department of Housing in the city of Houston offers affordable home loans particularly for first time homebuyers who usually get rejected by banks and private lending companies mostly due to low credit scores, high debt to income ratio, and inability to pay the big down payment. The first time buyer home loans Houston consists of government backed mortgage loans such as Federal Housing Administration (FHA) loans, Veteran Affairs (VA) loans, and United States Department of Agriculture (USDA) loans.
The government assisted loans are guaranteed by the government, which means the risk of financial loss to the approved mortgage lenders is reduced if the homebuyers default on the loan amount. The homebuyers can easily get government loans with 10 years, 15 year, or 30-year loan terms. The banks and private lenders offer conventional loans which can be obtained if the homebuyer has a good credit score and can manage big done payments and high interest rates. The most crucial thing in acceptance of mortgage loans is credit scores which are determined by FICO (Fair Isaac Corporation) and shows if the homebuyer has the ability to repay the loan on time or not.
The best first time buyer home loans Houston are, without a doubt, the FHA loans that allow a person to buy a home or change an existing home even with a low credit score. The FHA lenders ask for a 3.5% down payment from a homebuyer who has a poor credit score of 580 or below. The FHA lenders also ask for a 10% down payment from homebuyer with a bad credit score from 500-579.
The VA and USDA loans are come in the most sought after first time buyer home loans Houston as they both are zero financing loans that require no down payment. The VA loans are given to war veterans and require no down payment or mortgage insurance. The closing costs and interest rates of VA loans are also less than conventional loans. The USDA loans, on the other hand, encourage homebuyers to own a house in a rural area with manageable mortgage payments and interest rates.