First Time Home Buyer. Options? Grants?

[maz_phil]

Hello Mustachians,

I am hopefully going to be buying my first ever home. I am looking at different options for myself both in terms of mortgages and possible grants/benefits for first time home buyers. I am looking to get a home in Virginia, and I make under $70k a year (with no spouse). The home is a single-family HUD home priced just over $115k and I would want to live there while renting out the other bedrooms.

I have looked at an FHA loan with 5% down as an option because I have heard that it can remove the mortgage insurance over time. I have also heard that the FannieMae HomeReady program could be beneficial (although, I have recently seen some negative reviews). Additionally, I believe there are some VHDA grants for $2,500 for someone in my income bracket. Do you have any input on good first-time buyer options? Any experience with this yourself or any sort of advice you would like to contribute? I am all ears (or eyes)!

[rothwem]

Hello Mustachians,

I am hopefully going to be buying my first ever home. I am looking at different options for myself both in terms of mortgages and possible grants/benefits for first time home buyers. I am looking to get a home in Virginia, and I make under $70k a year (with no spouse). The home is a single-family HUD home priced just over $115k and I would want to live there while renting out the other bedrooms.

I have looked at an FHA loan with 5% down as an option because I have heard that it can remove the mortgage insurance over time. I have also heard that the FannieMae HomeReady program could be beneficial (although, I have recently seen some negative reviews). Additionally, I believe there are some VHDA grants for $2,500 for someone in my income bracket. Do you have any input on good first-time buyer options? Any experience with this yourself or any sort of advice you would like to contribute? I am all ears (or eyes)!

Unless something has changed recently, FHA PMI doesn’t go away unless you refi, which is a $2-3000 process.

[maz_phil]

Oof. I was under the impression if you did a 5% rather than standard 3.5% FHA that the mortgage insurance eventually falls off? I guess I was mistaken. Do you have any recommendations as far as options?

Hello Mustachians,

I am hopefully going to be buying my first ever home. I am looking at different options for myself both in terms of mortgages and possible grants/benefits for first time home buyers. I am looking to get a home in Virginia, and I make under $70k a year (with no spouse). The home is a single-family HUD home priced just over $115k and I would want to live there while renting out the other bedrooms.

I have looked at an FHA loan with 5% down as an option because I have heard that it can remove the mortgage insurance over time. I have also heard that the FannieMae HomeReady program could be beneficial (although, I have recently seen some negative reviews). Additionally, I believe there are some VHDA grants for $2,500 for someone in my income bracket. Do you have any input on good first-time buyer options? Any experience with this yourself or any sort of advice you would like to contribute? I am all ears (or eyes)!

Unless something has changed recently, FHA PMI doesn’t go away unless you refi, which is a $2-3000 process.

[rothwem]

I would avoid FHA if you can.  You get a low downpayment and better rates, but you pay an upfront mortgage insurance premium of 1.75% of the loan amount at closing in addition to the PMI every month. 

I would aim for a conventional 30 year fixed loan, and the bank doesn't really matter since your mortgage will probably be sold in a year or two anyways to a different bank.  Try to get the lowest interest rate that you can, and don't do PMI if you can avoid it. 

[tralfamadorian]

Since it's a HUD home, I would check to see if it qualifies for the homepath readybuyer program.

I would also google first time home buyer assistance programs for your county or city to see if there are any currently going.

[August26th]

Current FHA rules state that you’d need to put more than 10% down in order for the mortgage insurance to be cancellable beginning in year 11. With anything less than 10% down, you’re paying mortgage insurance for the life of the loan.