Some banks and city government agencies offer programs designed to help the first time home buyer purchase a residence. First time buyer programs often focus on making the down payment and closing costs more affordable, as buyers of this type don’t have funds available from selling a previous residence; however, each program varies in how it accomplishes this and who is qualified to use it. Read on to learn how a few different programs of this type work…

Some local city or town governments offer first time home buyer programs which let the buyer take out a low-interest loan (maximum amounts often range from about $75,000-$100,000 dollars) to pay for down payment and/or closing costs. To qualify, there is usually a yearly income range which the buyer must be within. Residents can check their city’s web site to see if such a program is offered and learn about its specifications. Also, some first time buyers can qualify for Federal Housing Administration (FHA) insured loans with less expensive down payments and closing costs. FHA loan insurance also makes it easier for a first time buyer to gain mortgage approval from lending institutions. Statewide organizations and agencies, such as the Washington State Housing Finance Commission, provide such assistance as well.

Certain banks and credit unions have first time home buyer programs as well, but these work somewhat differently. An example is the program offered by the Bank of Hawaii; according to their web site, this program features lower closing costs and doesn’t require a large down payment. A credit union in Orange County, California has a similar program; their web site emphasizes that there is flexibility about how the down payment money is obtained (family, government, non-profit source may be acceptable, unlike with some mortgages). Additionally, the bank might require that the home being purchased not be in excess of a specific price (this is true for some programs offered by cities and organizations as well); these limits frequently range from about $200,000 to $400,000 dollars.

Generally, first time buyer programs make it easier to purchase a home for the first time, by decreasing up-front costs. However, some restrictions may apply, with regard to the type of property being purchased, its purchase price, and the buyer’s level of income. Completion of a home buying education course or seminar is required to qualify for some of these programs as well.