Could a mortgage program help you buy a home?

If you’re looking at getting a mortgage, you may consider various mortgage options: fixed or adjustable rate? A 30- or 15-year term? But there are a number of different programs to consider. We’ll review several assistance programs, starting with government-backed mortgage programs, that could help you buy a home.

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Understand the different programs

FHA loans:

If you have limited funds for a down payment, an FHA mortgage might be right for you. These loans are backed by the Federal Housing Administration and down payments generally start at 3.5 percent.

Visit: HUD.gov for details.

FHA 203(k) loan:

If you are thinking of buying a fixer-upper as your primary residence, the FHA 203(k) renovation loan program might be able to help.

 

Visit: HUD.gov for details.

VA loans:

If you’re in the military, a veteran or an eligible surviving spouse, the VA home loan may make home ownership easier. Benefits include low or no down payment, [Link: How VA home loans work: https://bettermoneyhabits.bankofamerica.com/en/home-ownership/how-va-home-loans-work] possible lower interest rates, and no private mortgage insurance.

Visit: benefits.va.gov/homeloans for details.

Other government loans:

There are a number of other programs, as well. For example, teachers or policemen in revitalizing areas may be eligible for a homebuying discount through the Good Neighbor Next Door program.

Visit: govloans.gov or contact a HUD-approved housing counselor by visiting HUD’s website

Exploring your options

Different mortgage loans and assistance programs have varying requirements and benefits. Talk to your lender about the different programs and explore what’s best for your situation.

Assistance programs

There are different programs and tools that you can use in conjunction with your mortgage to help ensure successful home ownership.

Local programs:

Check with your local housing agencies and nonprofits for programs that provide down payment and closing cost assistance.

Employer programs:

Some employers provide down payment and closing cost assistance for their employees.

Homebuyer education (HBE) programs:

A homebuyer education program is usually required when you use an assistance program. Contact a homebuying agency to learn more.

Mortgage credit certificates:

This tax credit could reduce your federal income tax liability, which would free up more funds to qualify for and repay a loan.

Eligibility for assistance may depend on:

Type of mortgage

Property location

Steady source of income

Savings for a down payment

Credit score

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The material provided on this website is for informational use only and is not intended for financial or investment advice. Bank of America and/or its affiliates, and Khan Academy, assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment options.

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