Are you thinking about buying your first home in Caledonia, Wisconsin? If so you might be wondering if there are any special programs available to help you out. The good news is that there are! Even if you are not exactly sure that you qualify as a first time home buyer, there are still programs out there that can make homeownership more affordable.

In the realm of mortgages, the definition of a first time home buyer is quite different than what you might have already been thinking. For mortgage purposes, you are considered a first time home buyer if you have not owned a residential property in the past three years. There are a few exceptions to this rule. For example, if you once owned a piece of land without a residence on it or a mobile home without owning the land it was on, you may still be considered a first time home buyer.

• Lower Down Payment: Programs such as FHA Loans and conventional HomeReady or Home Possible programs will only require you to put 3% down on your first home.
• Lower Mortgage Insurance: Such programs could also get you lower private mortgage insurance (PMI) costs.
• Competitive Interest Rates: Programs for first time home buyers usually come with attractive interest rates which means saving you money on interest costs over the life of your loan.

Step 1: Know Your Budget

Before jumping in to mortgages, it is important to know the comfortable monthly housing payment you can afford based on factors like income, debt and desired down payment. This first step will guide your loan options and help you see what kind of house you can realistically afford in Caledonia.

Step 2: Loan Options for First-Time Buyers

Caledonia offers some loan options, which are manufactured specifically for first-time homebuyers. Below, there are some of the most popular options:

• FHA Loan: FHA stands for Federal Housing Administration. These loans are told to have lower minimum down payments (as low as 3.5%) and are more tolerant of credit scores than conventional loans.
• USDA Loan: Programs offered by the United States Department of Agriculture. These also have loan programs meant for first-time home buyers in eligible rural areas. USDA loans require no down payment. These might be good options if you wish to purchase a home in any of the surrounding areas that are eligible for. Don't forget to check the USDA eligibility map for the desired location.
• WHEDA Programs: The Wisconsin Housing and Economic Development Authority extends several loan programs to first-time homebuyers, including the WHEDA Advantage FHA Loan and the WHEDA Advantage Conventional Loan. These programs could offer qualified borrowers reduced interest rates and down payment assistance.
• VA Loans for First-Time Home Buyers: This is a good chance for veterans to have their first home. In most cases, most VA Loans make it possible for veterans to purchase a house without a down payment. VA Loans are typically competitive, meaning that a VA loan is a great way to save money over the term of your loan. Most of the time, PMI is a monthly charge that you pay with conventional loans when your down payment is less than 20%. A VA loan eliminates this fee, meaning there is more money in your wallet every month.

Step 3: Get Pre-Approved

It is a very crucial step in the home buying process. A mortgage lender will review your finances and approve you for a home loan for the most they are able to lend. It will strengthen your offer while negotiating with the seller and will also demonstrate your seriousness with the potential real estate agents in Caledonia.

Step 4: Save for your Down Payment

The amount you put down on your home has a tremendous effect on the kind of loan available to you and the monthly payment you have to make. While some programs allow a minimum down payment of 0% (think USDA loans), a larger down payment can decrease your loan amount and may give you a lower interest rate while also avoiding the additional cost of private mortgage insurance (PMI).

Step 5: Close the Deal

Once you've got the house of your dreams and your offer's been accepted, it's time to close. Here, you'll finalize the loan paperwork, settle any closing costs, and officially become a homeowner!