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First-time homebuyer? Here are 5 ways to get help (and save money)

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There are multiple assistance programs available for first-time homebuyers.  Kevin Kozicki/Getty Images

The benefits of homeownership are multiple. Whether it's for investment or tax purposes or simply just to own a place of your own, home ownership has multiple advantages. 

That's why many renters are usually eager to buy their first place. But the costs involved in home purchasing can be prohibitive, and many consumers are being priced out of ownership altogether. 

If you're looking to buy a home then reach out to a mortgage expert who can help you. They will help you crunch the numbers to determine exactly what you can afford.

As you go through the home purchasing process it may be worth looking into some of the assistance programs available for first-time homebuyers. In this article, we'll go over five options to consider.

Programs for first-time homebuyers

Here are five programs those buying their first home may benefit from.

  1. HomePath Ready Buyer Program
  2. Freddie Mac Home Possible mortgage
  3. Housing Choice Voucher
  4. National Homebuyers Fund
  5. Mortgage Credit Certificate (MCC Program)

HomePath Ready Buyer Program

The HomePath Ready Buyer Program from Fannie Mae lets buyers receive up to 3% in closing cost assistance. To qualify, your household income must be at or below the area median income (AMI). You must also be a first-time homebuyer.

Borrowers must complete the Fannie Mae HomeView online homeownership course. The down payment assistance only applies to HomePath properties, which are foreclosed homes owned by Fannie Mae. 

The HomeReady program only requires a 3% down payment, while FHA mortgages require a 3.5% down payment. HomeReady programs do not have any geographic limits. 

Freddie Mac Home Possible mortgage 

The Freddie Mac Home Possible mortgage program requires just a 3% down payment and is available to both first-time and previous homebuyers. The program is designed for low-income borrowers. 

Borrowers are allowed to include a co-borrower who will not reside in the home. 

Housing Choice Voucher

The Housing Choice Voucher (HCV) provides a monthly stipend to homeowners. Only certain locations participate in the HCV program.

To qualify, you must meet the specific income and employment requirements. Elderly and disabled families will be exempt from the employment requirement. Your home must also meet the U.S. Department of Housing and Urban Development (HUD) guidelines. 

National Homebuyers Fund

The National Homebuyers Fund Down Payment Assistance program provides up to 5% of the loan amount. Borrowers can use the funds for either the down payment or closing costs. You do not have to be a first-time homebuyer to qualify. 

Borrowers can use the funds for an FHA, VA or conventional mortgage. The funds can also be used to refinance an existing mortgage. Not all states are eligible for the program. Your lender must participate in this program for you to qualify.

Mortgage Credit Certificate (MCC) Program

The Mortgage Credit Certificate (MCC) Program provides up to $2,000 in tax credits for qualifying homebuyers. You must apply for an MCC before you buy the home. 

The MCC is more complicated than other homebuyer programs. You are allowed to take up to $2,000 in tax credits every year that you pay mortgage interest. The amount you take is a percentage of your mortgage insurance, between 10% and 50%.

A tax credit will reduce the amount of taxes you owe, so it's better than a tax deduction. Unfortunately, not every state offers the MCC tax credit. Contact your state's Housing Finance Authority (HFA) to find out if they issue MCCs. If you already have a mortgage broker, you can ask them if you qualify.

Make sure you're also accounting for interest rates at the time of purchase. A mortgage expert can help you figure out how much house you can afford.

What to know about homebuying assistance programs 

Not every first-time homebuyer will qualify for the programs listed above. Some of these programs are only available to individuals under a certain income threshold. Also, you may be limited by the type of home you can buy.

There may also be credit score requirements to prove that you're a responsible borrower and will be able to afford the mortgage. Speak to a mortgage expert who can review interest rates with you. They can also help you determine the exact mortgage payment you can afford. 

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