FHA
This is basically a first-time homebuyer program because it allows for minimal down payment (3.5% of the purchase price) and all of the down payment and / or closing costs can come from gift funds. Additionally, FHA doesn’t require a traditional credit history or a credit score like conventional loans. It’s also a little more forgiving of less-than-perfect credit. The downside of an FHA loan is that the maximum loan amount is much smaller than a conventional loan – not typically a problem for a first-time homebuyer, but that is why a borrower would often need to be able to qualify for a conventional loan when looking to purchase a move-up home. Additionally, FHA will only finance the purchase of a primary residence so it’s not available as a financing option on the purchase of a 2nd home or investment property. FHA has a great option for people who are buying a home that is in need of rehabilitation / remodeling. The FHA 203K and 203K Streamline allow a borrower to finance some remodeling costs along with the money for the purchase of the home. To learn more about loans that allow you to finance the cost of remodeling, go here: Remodel Loans.