There are a few borrowers who have figured out that there are many benefits with first time homebuyer loans. When you initially become excited at the prospect of buying a home, you may have rose colored glasses on.  As soon as you take those off, however, you will come to realize that had better look into viable home finance opportunities before you get in over your head.  You need to make sure you have enough financing to fund the purchase of the home you want.  Fortunately, there are two prominent first time home buyer loans that could serve you well.  They are called an FHA home finance and a conventional purchase mortgage.

An FHA home finance is made available by the Federal Housing Administration.  The government funds these 1st time home buyer loans to help Americans purchase their first house.  The initial advantage of an FHA home loan is that it does not have strict requirements to qualify.  This is made possible because you will have private mortgage insurance to cover you in case you are unable to make your payments.  Also, the very reasonable 3.5% down-payment helps prospective homeowners to be better able to afford this large purchase.  Closing costs are fairly low, there are no penalties for making payments early, and the more lenient underwriting makes this one of the best home finance opportunities for first time home buyers.

A conventional purchase mortgage is another option.  If you have a great credit score and a little more money saved up, this could be a great option for 1st time home buyer loan program.  You are not required to have private mortgage insurance with this option, so the underwriting is stricter, requiring you to have a higher credit score.  Also, there is a required 10 to 20% down-payment with a conventional purchase mortgage.  After you make the 10 to 20% down-payment, the interest rates you are charged will depend on your credit score and current market trends.

There are advantages and disadvantages to each of these home finance opportunities, so before you make your decision between these first time home buyer loans, it would be in your best interest to speak with an expert who can assess your current financial and credit situation along with market trends that determine interest rates.  While you may want to only pay a 3.5% down-payment with the FHA home finance options, you may want to avoid having private mortgage insurance, which is only possible with a conventional purchase mortgage.  Whatever you choose, you will soon be in the home you have always wanted.

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