Mortgage Programs Designed Just For You

The biggest resource for first time home buyers is the Federal Housing Administration (FHA). They work by providing private mortgage lenders with guarantees (insurance) against the loan that you take out with them. They help home ownership become a reality for many who don't have perfect credit or have the finances available to otherwise afford the hefty up-front payment sometimes required to buy a home. It is important to realize that they are not there to help you buy a home you cannot afford; they are there to help you to buy a home you can afford by providing guarantees and assistance up front. It is up to you to make sure that you are not buying a home that you cannot afford over the life of the mortgage note. Never get yourself into more debt than you can handle!

The process of applying for an FHA loan is pretty much the same as applying for a conventional mortgage. You will need to provide verified proof of your income over the past three years - yet what qualifies as income is relaxed a bit. Social security, alimony, rent paid by other family members and such qualify as income under the FHA program. In addition, short-term debt doesn't count against you (short-term is defined as being able to be paid off in less than 10 months).

You are allowed to use up to 29% of your total income towards housing costs and up to 41% towards housing expenses and other long-term debt obligations. Again, it is up to the homeowner to make sure they can afford the home they want to buy. Just because the FHA relaxes the restrictions doesn't mean you should buy a home that you have to struggle to afford each month.

Through the FHA they will help you get started on owning the home of your dreams - but remember, it is a cooperative process. You should still shop around at various mortgage lenders and try and negotiate the best rates possible no matter if you are a first time home buyer or a seasoned pro.

There is a wealth of information available about the FHA programs.
Your mortgage lender should be able to provide you with extensive information and guide you through the process. You can also read up on it yourself at www.fha.gov.

In addition to the FHA, there may be state and local programs available to you to help offset some of the costs of purchasing your first home. Check with your lender to find out if such programs exist.