Loan Options for a First Time Home Buyer
Why buy a home? Why not carry on renting? This is a question we cover in more detail on our rent vs. buy page, but the quick answer is that for many, a home is both an investment and a place that they can make their own. As an investment, there are tax advantages - you can deduct the interest on up to $1.1 million of mortgage loans from your income on your annual tax return.
Assuming you've weighed the benefits and decided that home buying is for you, now what? Our home buying guide covers details applicable to all home purchasers, but what considerations apply especially to first-time home buyers?
First-time home buyers have often not had the time or the opportunity to accumulate large down payments. While conventional loans often require you to put down as much as 10-20% of a home's value, loans insured by the Federal Housing administration (so-called FHA loans) may require as little as a 3.5% down payment. FHA loans are available on manufactured and mobile homes as well. You can reach out to bills.com's network of lenders for help with FHA loans.
Buying a fixer-upper
First-time home buyers often manage to get into a larger home than they could otherwise afford by buying a fixer-upper - perhaps an old home with remodeling work required in order to turn it into that dream home. Here again, FHA loans, in this case the 203(k) program, can help. Eligible borrowers, should they meet all the requirements, can borrow up to 110% of the value of a home after necessary improvements have been made.
Work with a good real estate agent
For your first home, perhaps more than at any other time, it is vital to find a great realtor to work with. The right real estate agent will help you find homes that you can afford and that meet your needs; a bad realtor will show you homes that they want you to buy, regardless of whether they are in your price range or meet your requirements.