A house can be an investment and a safety net for any family. And most people would often want to buy a home before they start a family. But for many couples, that option is fast disappearing. Every year, the housing market increases its rates. Recent reports show that house rates have risen to 173% over the last two decades. This has led to many couples choosing to rent or even delay starting a family.
But there are ways any family could buy their dream home. The government provides loans that could help low-income families, and there are strategies that middle-class families could use to purchase their dream home.
Get a USDA Loan
First introduced in 2014, this loan is for people who can’t get a traditional mortgage. For starters, this one has a zero down payment that is fit for both rural and suburban homebuyers. It’s a loan that the government often offers to those who are in the low-income bracket. The USDA loan is available in smaller towns all over the United States.
Like all other home loans, it has a list of qualifications and requirements that the borrower must meet. The loan is best for moderate to low-income families who do not need to put down a cash payment to buy their dream property. The government has made a list of requirements for those interested in getting this loan, and how you could qualify for it.
Compared to the USDA Loan, the FHA does not have any area restrictions. As of 2020, you can borrow up to 96.5% of the property’s value. The FHA usually has a 3.5% or 5% down payment requirement. Your down payment for the loan also can come from your savings or down payment assistance. The FHA will check and review the state of the property, and the approval will depend on whether your loan is justifiable for the property you intend to buy.
Rent Until you Own it
Most homebuyers often rely on getting a mortgage to buy a house and land property for sale. But if you don’t have a good credit score and a down payment, then it’s almost impossible for you to get approved. If you want to buy the house you’re currently renting, then you might want to consider a Lease to Own Contract. This option is possible if the owner of the property is willing to sell the property.
First-time Homebuyer Programs
Most people who purchase properties are first-time buyers. There are state programs, local programs, and federal programs. There are also mortgage companies and individual banks that offer first-time buyers a plan to buy the property of their dreams. The conditions and requirements would vary, depending on the organization or state. You might need the help of a mortgage broker to review which program is best for you, so make sure to meet with one before committing to any program.
Consider the Market
Check the state of the real estate market in your area. If it’s a buyer’s market, you could ask the seller to pay the costs of closing the deal. But it should be a buyer’s market, which means there are more properties for sale than there are buyers. But if the state is in favor of sellers, you might have a difficult time encouraging the seller to pay off the closing costs. Consider the current state of the housing market in your area and ask your real estate agent if this choice is possible.
Consider Private Funding
If you are lucky enough to have a family member or friend who is willing to fund your mortgage, then that’s another possibility. You could start a partnership where they will pay the initial cost, which you will then pay in installments. Make sure that the agreement is in black and white, and signed by a notary public. This ensures that both parties will not revoke or change up the agreement later.
Many first-time homebuyers do not know the options they have, especially if they do not have the budget to buy their first house. But there are many ways you can finance your first home, as long as you meet the requirements. While you evaluate your decision, think of ways to create a win-win situation. It should be both beneficial for you and your lender so you can purchase the house that you want.
There are many ways to purchase your dream home even if you’re getting by. You can pursue a government loan, review the housing market, and make sure that all options are covered before you give up. Homeownership is not a pipe dream if you know where to find the right lender.