You may hear a lot about first-time homebuyer programs. These programs offer some special benefits to people who are buying their first home. The actual benefits you get depend on the program. These programs may be offered by local governments and organizations. For the most part, these programs offer some sort of subsidy to make homeownership more affordable for low-and middle-income families. They may offer attractive loan terms, or make it easier to get into a house with a smaller down payment.

Are They Worth It?

First-time homebuyer programs can be useful for some. However, they are not the right choice for every first-time buyer. These programs often come with a variety of strings attached, because they are designed to help people with specific financial characteristics. You should certainly investigate any subsidies that you may be eligible for. However, these programs have less value if your credit is good. With a FICO score above 720, you're probably better off in a standard, unsubsidized mortgage loan. If your score is below 680, you'll want to take a good hard look at first-time homebuyer programs.

Qualifications and Restrictions

In order to use the first-time homebuyer program, you typically have to qualify. To meet their requirements, you may have to have an income below the specified level. They try to limit these programs to those in need. In addition, you'll most likely find limits on the cost of a home that you can buy in the program. You'll be limited to the lower-cost homes in your area. You should also be aware that these programs don't allow for the full spectrum of loans in the marketplace. You might be limited to one or two types of loans — most likely you'll be able to do a thirty-year fixed-rate mortgage. Finally, if you decide to sell your house too soon, you may have to pay recapture taxes. All things considered, it can be difficult to qualify for these programs and make them work well. Nevertheless, they are a perfect fit for some borrowers.