HUD First Time Homebuyer Information

FHA First-Time Home Buyer Loan

The FHA loan has the easiest qualifying requirements for home buyers in the market for a mortgage. As of December 2010, FHA loan requirements state a borrower must have a minimum credit score of 640 and enough money to put a 3 1/2 percent down payment toward the purchase of the home. Conventional loans typically require borrowers to have a 720 credit score and enough funds for a 10 to 20 percent down payment.

HUD provides ADDI funding for local governments to administer. The program provides down payment assistance to first-time home buyers. Up to $10,000 will be provided to qualified home buyers to be used for down payment, closing costs or the rehabilitation costs for a home. The home buyer must meet income level requirements to be eligible for the program. The financial assistance comes in the form of a deferred loan that does not have to be repaid until the home is sold or refinanced.

The Homeownership Voucher program provides the opportunity for low-income households to convert their rental subsidy voucher to a mortgage assistance payment. In order to participate in the program, the home buyer must be receiving rental subsidy payments from the Section 8 Housing Choice Voucher program. The home buyer must have a consistent employment history to be eligible for the program. The home buyer must also be able to qualify for a home loan with a lender. Local housing authorities administer the Homeownership Voucher Program.

HUD approved counselors provide free or low-cost services to first-time home buyers. Counselors explain the entire home-buying process, which includes contracts, home inspections, hazard insurance, title and escrow. They can help home buyers determine how much down payment is needed for the purchase of a home. Housing counselors also help home buyers determine a budget to include a monthly mortgage payment. Most HUD first-time home buyer programs will require completion of a home buyer seminar.