With the Homestart grant, you will receive $5,000 to help with your down payment and closing costs. Most first home owners will be required to put down 3.5% through a government housing loan (if in an urban area) or 0% down (if in a rural area). If you are looking for first time home owner grants, you are doing the right thing. The Federal Government has many programs in every state that will help with buying a home. Here in Salt Lake City, and throughout Utah and other western states, we have a home loan grant called Home$tart. This grant is managed by the Federal Home Loan Bank in Des Moines, IA.
Urban areas will use an FHA home loan program and if you are in a rural area, you can use a USDA home loan program. Attefallshus
FHA Housing Loans
Simply put, this is a loan insured by the Federal Government. They guarantee the loan will be paid back so a lender can rest assured they will not lose money. This makes it easier for a lender to accept a new home buyer, despite being new to credit or other normal obstacles that might get in the way. Normally, to get a conventional mortgage, the income guidelines are more strict. FHA will allow you to make less money and get more house.
The downside to FHA is that they require a lifetime insurance that you have to pay each month. This is called mortgage insurance and this is broken down into two different payments. One payment is 1.75% of the entire loan and this is added to the loan’s subtotal and financed over the life of the loan. If you get a $100,000 house, you will pay $101,075 and this will be spread out over the life of the loan and you will pay interest on this money. You will also have to add.85% to your monthly payment for mortgage insurance. This would essentially be $85 a month per 100k and this would have to be paid throughout the life of the loan. This would cost your $30,000 over the course of a 30 year mortgage. For a $200,000 price tag (average cost to buy a house in Salt Lake City, Utah), you will pay $60,000 over the life of a loan (if you don’t refinance with a conventional loan at some point).
USDA Housing Loans
USDA is another option for a Federal housing loan. However, this government funded program can only be used in areas they consider rural. You can can visit the HUD website to see if your possible property will classify for the USDA program.
USDA does not require any down payment and their mortgage insurance is a lot cheaper. You will only be required to pay.05% of the loan value, equaling about $50 a month. That is about $18,000 over the course of 30 years.
VA Housing Loans
The VA loan was designed to offer long-term financing to eligible American veterans or their surviving spouses (provided they do not remarry). A VA loan is guaranteed by the U.S. Department of Veterans Affairs (VA), similar to the FHA and USDA loans.
If you are a member of the military or retired or discharged from the military, then you will qualify and take advantage of their house loans rates. They do not require mortgage insurance and they do not require a down payment. However, they do charge a lending fee. This fee varies from 1.5% of the total home loan, to 3.3%. You can reduce this fee by paying a down payment and it is less if it’s your first time using the VA home loan program. You are allowed to use this twice over the course of your life.