Many people wonder what the best program is for a first time buyer? The answer is dependent on the buyer’s credit score and credit profile, the buyer’s income and the amount of cash the buyer has to spend on down payment and closing costs. The combination of these items gives a loan officer clues to help the buyer identify the best programs for him her. There is no single one program that is best for everyone.
For buyers with less than 5% of the sales price in savings, if you are purchasing in a qualified area and are within the income limits then a Rural Development loan (RD) might be best if you want to spend the least amount of cash and have a relatively low payment. If you do not qualify for RD, either because you are over the income limit or buying in an ineligible area, and you want a lower cash scenario then an FHA (Federal Housing Administration) loan might be a better choice. Another reason to choose FHA would be because it tends to have more lenient underwriting in terms of credit scores and maximum housing & debt ratios allowed.
Buyers who have 5% or more to put down may better be served by a conventional loan. For conventional buyers with less than 20% down there are multiple options to be considered! There are loans with no monthly mortgage insurance and loans with mortgage insurance and your loan officer can explain all these options to you.
Also most state agencies have mortgage programs that meet the needs of many potential homebuyers. NH Housing has two fabulous programs: NH Housing Flex and NH Housing Home Preferred.
The best option is the loan you understand and meets all of your needs. I think it is best to compare several options so you can make an informed decision.