What You Need to Know About HUD Homes First-Time Buyer Program
Published June 14, 2022
Buying your first home can seem overwhelming, but most people want to enjoy the benefits of being a homeowner. The U.S Department of Housing and Urban Development, or HUD, strives to make it easy for buyers to purchase their first house. For example, the HUD homes first-time buyer program includes FHA financing. FHA loans enable you to purchase your home with as little as a 3.5% down payment. There are special requirements for government loans for first-time homebuyers. Here’s what you should you know about the HUD program.
Some people who are interested in government loans for first-time homebuyers may have a lower credit score and may not be sure if they qualify. Through the HUD homes first-time buyer program, you could qualify for a new mortgage with a score as low as 620. Be aware, however, that there may be additional requirements related to bankruptcies and other critical events that may be listed on your credit report.
Proof of income
To qualify for the HUD homes first-time buyer program, you must prove that you can afford to buy the home that you are interested in. More than that, you must prove that you have a stable income that is likely to continue. To meet this requirement, you should provide your W-2s for at least the prior tax year. You also must provide your most recent paystubs for the last month or two. In addition, the lender may complete a Verification of Employment or take other steps to ensure that your employment is stable.
Debt-to-income (DTI) ratio
Another requirement for the HUD homes first-time buyer program is a satisfactory debt-to-income ratio. Specifically, this ratio must be 43% or less. It is determined by first adding up all monthly debt payments. These include car payments, student loan payments, child support payments, credit card payments, and the payment for the new mortgage. This sum will be divided by your monthly income to arrive at the DTI. Keep in mind that there is a front-end DTI ratio as well. This ratio divides only the new monthly mortgage payment by your monthly income. It must be 31% or lower. There may be some exceptions to the DTI requirement if you have a higher credit score or other compensating factors.
HUD down payment assistance programs
As you research the HUD homes first-time buyer program, you will find that you also need to provide proof that you have the down payment funds available. There are some first-time buyer down payment assistance programs that you could apply for. For example, qualified applicants may obtain their down payment funds through a forgivable second-lien mortgage. There are also state-specific down payment assistance programs available.
Learn more today
The best way to determine if you qualify for the HUD homes first-time buyer program is to speak with a mortgage consultant. We’re available to answer your questions and can complete a pre-qualification for you.