First-Time Home Buyers: Financing Programs You Might Not Know About

first-time home buyers

Spring and summer are the busiest seasons in the real estate market. On any given weekend, driving around the Triangle you will see numerous “Open House” signs scattered on the shoulders of tree-lined streets. People who are actively seeking to purchase properties might do an impromptu visit to an open house on the way home from Sunday brunch, you know, just to see what it looks like inside.

First-time home buyers are particularly curious at the prospects in the housing market. But, before you start charting your Saturday or Sunday course of open houses, one of the prerequisites of purchasing a home is being able to finance it. Sure, anyone can simply go to their personal bank, ask for a loan and fill out the necessary paperwork. But we would be remiss if we left out several financing options available only to you. In some cases, you may even be able to purchase a home with zero money down.

Below is a list of several popular—and some not so well-known—financing options for first-time home buyers.

Your Personal Bank/Credit Union/Online Banking Institution

This may be the first option for many people. After all, you have a credit history with them, and it might make the process a little easier. Depending on your bank, it may have access to several of the loan programs listed below, or it may have its own special programs.

One advantage is that banks compete fiercely within the housing market, and this competition creates a borrower’s market. It might be best to obtain three offers and compare the rates (this could save you thousands of dollars over the life of your housing loan).

Banking institutions are a great starting point for obtaining a loan for a first-time home purchase, and you may find some pretty amazing deals. For instance, SECU banks in North Carolina offer zero down, 100% financing for qualifying members.

The Federal Housing Administration

The FHA is used by over 40% of all first-time home buyers. The reason is simple – its rates are low, it requires only 3.5% down payment and is more lenient when evaluating credit scores and income-to-debt ratio. Applying for an FHA loan is relatively easy, and many banking institutions have FHA first-time home buying loans.

401(k) Loan (down payment option)

If you have a retirement plan from your employer, or a qualifying IRA account, you may be able to borrow from your account to use as a down payment on a new home. There is no deduction penalty, and you essentially pay your retirement plan back with interest. However, different plans have different rules, and it’s best to talk with a plan advisor before using this option in order to fully understand the risks and obligations.  

U.S. Department of Veterans Affairs

The VA assists service members, veterans and surviving spouses in securing financing for homes. They generally require no down payment and have competitive interest rates.

U.S. Department of Agriculture

Yes, the USDA has a home buyers assistance program, and you don’t have to live on a farm! The USDA offers 100% financing for certain homes that qualify (in designated regions) and certain buyers who qualify (there are income limitations).

Good Neighbor Next Door

These are generally known as “teacher loans;” however, they apply to firefighters, EMTs and law enforcement personnel. Hence the name “Good Neighbor” program. This is a HUD-sponsored program that allows up to a 50% discount on the list price of homes in revitalization areas. However, there are a few catches, such as you must commit to live in the property for three years. The eligible homes go fast in this program.

HUD 203(k)

These are special FHA-backed loans that allow prospective buyers to take on a fixer-upper home. Essentially, the loan allows individuals to borrow funds to purchase a house and compete proposed upgrades or make repairs to property.

Energy Efficient Mortgage

The Energy Efficient Mortgage programs allow you to increase your borrowing amount to purchase homes that have energy-saving improvements. You can also use the mortgage program to upgrade a home and add more green features such as solar panels.

North Carolina Grants

North Carolina offers several different types of grants and other assistance for first-time home buyers. Most are income dependent. For example, the NC Housing Finance Agency has a program called NC Home Advantage Mortgage. This program provides down payment assistance, and in some cases borrowers don’t have to repay the down payment amount if they stay in the home long enough. There are also a number of other state-specific programs that provide assistance, loans and grants.


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The team at Gaskill Realty helps you rent, buy, invest, or sell property. Let us find you good living.
Looking to sell or buy: 919-215-6479 | Looking to rent or invest: 919-833-6157

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