First Time Home Buyer Suggestions In Current Market

[Jordan Joachim]

Hi all, this is my first post and am very grateful and excited to be a part of the community. I'm looking to purchase my first property fairly soon here and was hoping I could get some advice and ideas from the veterans...veteran being anyone who knows more than me, which is probably everyone at this point. lol But not for long! 

I've been preapproved to purchase a home with a FHA but am noticing the markert is currently limited to buyers using these loans. I've been working dilligently on my credit and plan on applying for either a convetional 97 or 0% down loan with USDA. My credit should be beyond ready for this move come next month. On top of that, I've also found two rising cities in my area that are offering purchase assistance to first time home buyers in their area. The only downfall to these programs is 1.) The home must be your primary residence for 15-20 years and 2.) You are not allowed to lease out the property. They do however only require 1% of a downpayment from you, cover the other 2%, and also supply up to $40,000 towards your mortgage. That $40,000 does not need to be paid back as long as you remain in the home for 20 years and do not lease it out. Can you see why this would be a problem for us? As long as no civil suits are placed against me however, I have no problem returning the $40,000 upon sale of the property as I would with any other lender. If I were to work with the city, I would find a roommate to pay my mortgage and then quickly sell or 1031 if possible in this scenario.

My question(s) to you is...which one of these 3 options do you believe to be the smartest first time investment and why? My mentor is also prediciting our market to crash fairly soon and believes I should wait on jumping the gun. Do you agree?