First Time Buyers

by Katherine Mccoy

For several mortgage seekers, especially first time home buyers, the process of trying to save that seemingly huge down payment has always been a financial drawback. What most new home buyers do not realize are the vast number of mortgage loans available these days that require very little or no down payment. Remember, the definition of a first time home buyer has actually changed over the last few years.

Today, a first time home buyer is one who has not owned a principal residence within the previous 3 years. Among the newest mortgage programs available today are Fannie Mae’s Alt 97% loan, Flex 100%, and the Flex 80/20% mortgage home loan. The Alt 97 features a 3% down payment and was created specifically for people with a modest income who wish to become new homeowners. This first-time home buyer program also requires a home buyer education course for qualification and private mortgage insurance.

The Flex 100 mortgage requires no down payment. There is no home buyer education class to complete, however, the credit requirements are more critical. The interest rate is generally higher and private mortgage insurance is required.

Flex 80/20 home loan removes the down payment and more importantly, the need for private mortgage insurance. Keep in mind, the interest rate for this type of mortgage is obviously higher than that of other types of first time buyer home loans.

Another program to consider is the FHA mortgage or Federal Housing Administration loan. The Department of Housing and Urban Development insures residential loans made by private mortgage lenders.

With your FHA insured mortgage, you can purchase your new home with as little as 3% down.

The UFMIP or up front mortgage insurance has been reduced as of January 1st 2001 to only 1.5% of the amount being financed.

The monthly private mortgage insurance is simply 50% of the mortgage amount divided by 12 months. And once you have reached 78% loan-to-value or 22% equity, the lender must remove this requirement on your loan. For more information on the FHA home mortgage, visit HUD at

Veterans should consider the advantages of a VA guaranteed home loan.

The VA guarantee allows qualified Veterans to purchase their new home with no down payment.

There is no monthly private mortgage insurance requirement.

A VA funding fee is required, but it can be financed and varies according to the Veterans previous Entitlement usage.