First Time Home Buyer Programs?

Question

I'm almost out of debt. My credit score is hovering at around 610. I don't currently have anything saved but between tax returns and some insurance claims, I should have at least 1k in the bank soon.

Once I eliminate my last few debts that will be an extra few hundred dollars a month I could start saving as well.

I really want to get started house hacking. I live and work in Aurora CO, which is where I will be looking for my first property. I'm an avid believer in that there is always a great deal to be found and I am confident I can find one.

I guess to get to my question I am wondering if it is recommended to use first time home buyer programs/grants in order to get into my first property. I will be taking the necessary class to qualify for the FHA loan next month and am searching for other programs out there that can help me get into a property sooner rather than later.

I am open to any possible avenues to accomplish this goal and am concerned that my lack of down payment may slow me down. I don't want to wait any longer so I am in turn asking, how can i come up with the necessary down payment sooner rather than later? More specifically what loans, products or services are available to help grease the gears so to speak?

Colin E Stevenson · Answer

Not sure about Colorado, but in Wisconsin there is a state backed first time buyer loan called WHEDA, which the down payment is rolled into the loan. I used it to buy my first duplex and I basically just had to come up with earnest money and closing costs. Perhaps Colorado has a similar program?

Marcus Auerbach · Answer

@Marc Spagnuolo - great questions! Maybe you can get a side hussle to expedite the prozess - after all real estate investing is all about the hussle ;-)

It sounds like your credit score is "hovering" and not developing the way you want it to - I suspect that you are looking to improve your score by lowering your debt, which is a common sense approach. Unfortunatley, it won't get you very far, if your credit report is very short; in other words it lacks data about your financial behaviour, which let's the software calculate your score, which represents your predictability and trustworthyness as a borrower. I know, because I had "no credit" when I came to the US 11 years ago.

Simply put your score is the sum of every months "bad" and "good" data points or entries. A bad item would be a missed payment, a good item would be a payment on time. Often times it is a lack of positive entries that can hold a credit score back. You want to show a predictable and reliable payment pattern - like clockwork.

You should download the app from credit karma, which allos you to monitor your credit at no cost/no impact. it also shows you in what category your credit is hurting, so you can focus on those. You should be able to get your score above 680 by the time you have your downpayment ready.

Here is a good article about building your score from scratch:

https://www.creditkarma.com/advice/i/how-to-build-...

Zac Burk · Answer

Id do it! I didn't qualify in MI. There's different programs here. MSHDA is doing 3% down conventional loans for first time home buyers right now. Its a great way to get into a duplex for very little down AND not have to pay PMI. Although here, the market is just crushed with this program south of Detroit. Slim pickings...

Scott Schultz · Answer

There are also Programs like USDA that is still zero Down if the location fits, the Department of Ag insures loans in rural areas in just about every state, and has a good program, with low credit score requirements https://www.rd.usda.gov/files/3555-1chapter10.pdf  also if you served in the Military the VA offers a no down option. I would however be careful as you are just getting out of debt, to have an amount of savings set aside, as home ownership can get expensive in the short term some times. and I agree with @Marcus Auerbach to get a side hustle and just put money aside, weather that be delivering Pizza like Dave Ramsey talks about, shoveling snow and mowing lawns, or what ever just to save up extra cash, Real Estate does take a lot of money contrary to what the Guru's are selling.  Best of Luck!

Anthony Bellesbach · Answer

you should try and work out a deal for some of ur debt issues and if they are on collections  do not just pay them off . your better of getting them to work out a deal. For less money if they will. But the biggest thing is making a deal that if you pay whatever amount of it that it will be taken off your account . but if you dont have much of a credit history it could hurt you if you do that as well

Bill S. · Answer

@Marc Spagnuolo don't overlook cutting some costs in your budget as well to increase your savings. You need some savings. Getting a good credit score is important but keep in mind paying CC interest rates 10%+ (don't know if you have those) is hurting you in the savings category.

Marc Spagnuolo · Answer

Thanks for the info guys! @Bill S. In way of cutting down on my unnecessary expenses, there certainly is some wiggle room there. The responses to my question have made it pretty clear I need to double down on my efforts to boost my credit score, observe and control my spending as well as find some ways to bring in some extra money. If I am going to reach this goal this year it is going to take some more effort on my part.As for paying off CC and getting a deal on some of the debts in collections @Anthony Bellesbach , I'm glad you mentioned this as I totally forgot about this approach. Haven't had enough extra money to consider that but I do still have two debts in collections I could try that with. Unfortunately, I've already paid most of my collections off through payment plans in the past year. Luckily overall between what's in collections and what I have on my valid lines of credit only totals about $800 left. Which I will have eliminated within the next few months. Maybe sooner.So I'm not in the worst position. I've heard stories of folks doing it with less.

Marc Spagnuolo · Answer

@Marcus Auerbach , thanks for the great response! As for my credit score, this time last year it was about 510. So it is definitely improving. It mostly jumped up pretty high at first and now is just barely creeping up. So yes, I should focus more on boosting that up higher. I'm just getting to a point where I can open new lines of credit. I'm just a little apprehensive to do so.I have considered a side hustle as well and have some ideas percolating to address that.@Colin E Stevenson  This is exactly what I would like to do. A duplex would be the ideal situation for me to house hack and a loan structured such as that would be one way to help make it happen.@Dan Mackin I would love to check those out. Also, would be awesome to attend one of those sorts of classes in the future if there are any in the Aurora/Denver area soon.All in all, it looks like I'm going to have to step up my hustle a notch to get to where I want to be. Thank you all who responded.

First Time Home Buyer Programs?

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