Stuff Your Boss

Quite possibly the most common loan option for the first time home buyer has become the FHA loan.  They now represent over a third of the total mortgages and an even higher percentage of the first time home buyer programs.  What this suggests is that home affordability is now more closely tied to the FHA interest levels than ever before.

Given how volatile things are these days, we’ll keep the FHA vs. Conventional comparisons updated on the site.

The biggest change that we’re seeing is that the FHA rate is now sitting close to 5% and has been for some time.  Compare that to historical rates over 6%, we have a level of home affordability that we have not seen in years.  Rates are starting to slide higher, but we currently have almost 15% of extra purchasing power for the average first time buyer.

HUD announced that they will be making changes to the up-front part of the mortgage insurance on FHA loans effective April 2010.  This will add .5% to the mortgage premium.  This is to help make the pool of loans more secure, but will mean higher expenses for first time homebuyers.

The best part of today’s first time home buyer programs is that they are all good.  There are no dangerous, adjustable mortgages.  They’re almost all fixed rates and most states have incredible home buyer programs to help spur housing.

Some state by state examples:
Montana: Unfortunately, the state of Montana does not currently offer first time home buyer grants, but only provides reduced interest loans. There are, however,  local grant programs as well as Federal programs. Please visit Montana First Time Home Buyer Grants for more information.

See all the state down payment assistance or first time home buyer programs.