2011 First-Time Home Buyer Programs

What types of assistance programs are there for first-time home buyers in 2011? Are there any mortgage loans designed specifically for first-time buyers? Where can I go to get information about buying my first home in 2011? These are some of the questions we will address in this tutorial. On this page, you will find a collection of tips, tools and resources for first-time home buyers.

What is a First-Time Home Buyer Program?

When we talk about first-time home buyer programs, we are actually talking about many different things. This term encompasses a wide variety of assistance programs for people buying their first home. Some of these programs are educational in nature, such as the counseling offered by housing counselors. And some of the programs are financial in nature, such as the home buyer grants that are available in some states. Our goal in creating this tutorial is to help you understand what kind of help is available for first-time home buyers.

Grants, Funding And Other Financial Assistance

I won't lie to you. Grants for first-time home buyers are pretty hard to come by these days. During the housing boom, there were many programs that offered funding assistance for first-time buyers. But a lot of those programs disappeared during the housing crash of 2008 and the recession that followed it. Today, most of the first-time home buyer grants are offered at the state level. So, if you're looking for some kind of financial assistance for buying your first home, you should start your research within your own state.

The Department of Housing and Urban Development (HUD) has a state-by-state list of home buying programs. Some are for first-time buyers, and others are open to all qualified buyers. Some of these programs offer grants and other financial assistance, while others focus on education and counseling.

You can find out what's available in your state by visiting this section of the HUD website:

Mortgage Loans for First-Time Home buyers

Remember what I said earlier about home-buying grants drying up during the housing crash? The same is true for first-time home buyer mortgage programs. During the housing boom, most mortgage lenders were offering some kind of program designed for first-time home buyers. These were usually mortgage loans that had low down-payment requirements, flexible qualification, and other traits that appealed to first-time buyers.

In 2011, however, most of these programs have disappeared. You can still find information geared toward first-time home buyers on the websites of most lenders. But that's probably about all you'll find. When researching this article, I visited the websites of the three largest mortgage lenders in the United States. They all had information pertaining to first-time home buyers, but it was mostly educational in nature. They offered handbooks that you can download, consultation services, and other things to help you learn about the mortgage process. But they weren't offering any zero-down mortgage programs or "flexible qualification" options for first-time home buyers.

In other words, they're glad to help you learn about the mortgage approval process -- but they're not willing to bend their underwriting rules for first-time buyers.

FHA Loans Are Still a Good Option

The FHA home loan program is still a great option for first-time buyers who don't have a lot of money for a down payment. This program is not reserved for first-time home buyers. Anyone who meets the basic requirements for the program can apply for a loan. But while the FHA program is not limited to first-time buyers, it is ideally suited to them.

The biggest obstacle for most first-time home buyers is the lack of a down payment. For a conventional mortgage loan in 2011, you'll have to make a down payment of at least 5 percent. Many lenders will require as much as 10 percent down. This presents a challenge for many first-time home buyers. Someone who is moving up from one home to another can use the proceeds from one sale to finance other. For example, if I sell my current home, I can probably make a profit on it. I can then use those proceeds for the down payment on my new home. Obviously, this is not an option for a first-time buyer. And that's where the FHA loan program can be beneficial. If you meet the minimum requirements for this program, and you have a FICO credit score above 580, you could qualify for the 3.5 percent down-payment program. Aside from VA and USDA loans (which often require nothing down), this is about the best deal out there for first-time home buyers in 2011.

Of course, there are some disadvantages to the FHA home loans. For one thing, you will have to pay two forms of mortgage insurance on the loan. You have to pay an up-front insurance premium at closing, and you'll also pay insurance on top of your monthly mortgage payments (learn more here). But for many first-time home buyers, the benefits of the FHA mortgage program far outweigh the disadvantages. If you don't have a lot of money to put down -- but you are otherwise qualified for a mortgage -- the FHA program might be a good option for you.

Educational Programs for First-Time Buyers

Knowledge goes a long way when you are buying your first home. If you educate yourself before getting into the process, you will be more likely to choose the right mortgage loan. You will also know how to establish a housing budget to avoid financial problems down the road. Perhaps best of all, you will know about all of the options you have when buying your first home. This is why you should consider a counseling program for first-time home buyers.

There are many of these programs available, but I recommend using a HUD-approved housing counselor. These counseling agencies receive special training through the Department of Housing and Urban Development, and many of their services are either free or offered at a very low cost. These counselors are located all over the country.

You can find a counselor in your area by visiting this section of the HUD website:

Many people who hear the phrase first-time home buyer assistance immediately think of funding, grants and other financial aid. But in my opinion, educational assistance is even more important. Many of the problems that led to the housing and mortgage crisis could have been avoided if people were better informed about mortgage loans. If you walk into a mortgage lender or broker's office knowing absolutely nothing about home loans, there's a good chance you'll be steered down the wrong path. This is especially true for first-time home buyers, who usually don't know as much about the mortgage process.

This is why education is so important, and it's why I recommend seeking a housing counselor in your area. Just tell them you're a first-time home buyer, and you want to learn more about your options when buying a home. They will set up an appointment with you and teach you all about mortgage loans, credit score requirements, as well as any home-buyer grant programs that are available in your state.

The Home Buying Institute Website

In closing, I would recommend that you spend some time on our website. It might be a good idea to bookmark it for future reference as well. We have literally thousands of articles, tutorials and news stories on this website, and most of it is geared for first-time home buyers like yourself.

Here are some sections of our website that are particularly useful for first-time buyers:

I hope you've enjoyed this guide to first-time home buyer programs and assistance. If you would like to learn more about any of the topics discussed in this article, you can use the search box at the top of this page. You can also use the quick-reference links provided above to learn more about mortgage loans and home buying. Good luck.