First Time Home Buyer Loan Programs you Should Consider

First time home buyers in California have a lot of information to sort through and understand starting with the home buyer loan programs available. So, There are more programs available than most people think. Check out our guide on the top programs you should consider.

FHA Loans

The FHA loan has the reputation of a ‘first time home buyer loan.’ While anyone can use it; So it is great if you’ve never owned a home before; because of its low down payment requirements and flexible underwriting guidelines.
For a complete breakdown of FHA Loan requirements, fees and other things to consider, click here.

First Time Home Buyers

VA Loans

If you’re a first time home buyer and a veteran of the military or currently serving, you may be eligible for 100% financing from the VA. So, The VA program has flexible guidelines; as long as you’re eligible (served at least 181 days in the military during peacetime). Qualifying for a VA loan:

  • Average 620 credit score (varies by lender)
  • Maximum 43% total debt ratio (your monthly debts can’t exceed 43% of your monthly income)
  • Meet the VA disposable income requirements each month based on your location and family size
  • No down payment
  • Stable income and employment for 2 years
  • Proof you are eligible for a VA loan

For more information on VA Loans click here

USDA Loans

If your total household income is less than 115% of the area’s average income and you buy a home in a ‘rural’ area according to USDA standards; So, the USDA loan is one of the best first-time home buyer loan programs. Qualifying for a USDA loan:

Minimum 640 credit score.

Maximum 31% housing ratio (your housing payment can’t exceed 31% of your monthly income)

Maximum 41% total debt ratio (your monthly debts can’t exceed 41% of your monthly income)

Proof that you’ll occupy the property as your primary residence

Proof that you don’t qualify for any other financing options

Stable income and employment for the last 2 years

No down payment

Conventional Loans For First Time Home Buyers

If you have above average credit and at least a 3% down payment, a conventional loan may be a good option even as a first-time homebuyer. Qualifying for a conventional loan:

Minimum 660 credit score

Maximum 28% housing ratio (your housing payment can’t exceed 28% of your monthly income)

Maximum 36% total debt ratio (your total debts can’t exceed 36% of your monthly income)

Stable income and employment for the last 2 years

At least 3% down

All first-time home buyer loan programs require some type of mortgage insurance. FHA and USDA loans require mortgage insurance for the loan’s term. Conventional loans charge PMI (private mortgage insurance) only; until you owe less than 80% of the home’s value and VA loans charge a funding fee upfront; but not throughout the loan’s term. So, First-time home buyers in California have many options. So, Figure out where you fall with your qualifying factors and choose the loan; that offers the best rate and terms for your financing needs

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