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Government Programs for First Time Homebuyers                                                                                                                        

FHA government programs for first time homebuyers reflect the Federal Government's commitment to expanding home ownership and home buying opportunities through reduced down payment requirements,and relaxed underwriting standards when compared to conventional mortgage loans. FHA government programs for first time homebuyers are flexible.

FHA loanprograms recognize many areas as a high cost area and have increased the maximum FHA loan amounts. The FHA loan limits are as follows:

FHA loan high cost areas:

  • One Family        $362,790
  • Two Family        $464,449
  • Three Family     $561,411   
  • Four Family       $675,000

The FHA government program for first time homebuyers is an outstanding choice for first time homebuyers because the program requires only 3% cash (which may be a gift) into the transaction and is significantly more forgiving of past credit issues. We will look specifically at the last two years of your credit history. If there are some credit problems, we may be able to overcome them with sufficient explanations and supporting documents of why the issues occurred. Never rule yourself out of qualifying for FHA loan because of credit, prequalify and have me review your credit. I have more information on government programs for first time homebuyers credit requirements available

This page is focused on the using FHA programs to purchase a home. If your interest is in refinancing an existing FHA or VA loan please go to my refinance center. For extensive information on the FHA 203(k) program to remodel a home please see my renovation loans page.

There are some credit issues that we must allow for a certain time to pass before you can qualify for a FHA loan. They are follows:

  • Two years from the date of discharge for a bankruptcy
  • Three years from the date of foreclosure

FHA requires any outstanding collection accounts, judgments, charge off's be paid in full before closing. If you have had some credit difficulties in the past, compensating factors can often get your loan approved.


  • Lower required down payment
  • FHA loans are assumable* with a qualified borrower
  • Higher qualifying ratios of 29% for housing and 41% for total indebtedness on existing construction; 31% for housing and 43% for total indebtedness on new construction
  • More flexible underwriting standards
  • Gift funds for down payment and closing costs are allowed
  • Up-front Mortgage Insurance Premium can be financed
  • Less cash out of pocket required
  • The lowest down payment (as low as 3%, never more than 5%) requirement of any non-subsidized financing program
  • Non-occupant co-borrowers are allowed for qualifying purposes
  • Seller allowed to pay prepaid expenses
  • Seller can contribute up to 6% of purchase price toward closing cost and discount points
  • Charges on conventional loans such as tax service fees, underwriting fees, copy & courier fees are not allowed to be charged to the buyer with FHA loans
  • With FHAs no cost streamlined refinancing you can lower your payment at NO COST to you. Usually, closings can occur within 2-3 weeks.
  • The FHA ARM has the best features on the market with a 1% annual interest rate cap and a 5% lifetime cap.


If you currently have an FHA loan and are considering refinancing to lower your monthly housing cost there is a simple low cost " FHA streamline" refinance process which you should consider. One of the important features of the FHA program is that the loan is assumable should you sell in the future. If interest rates rise, an assumable mortgage may be the difference between being able to sell your home or not.

Other Government programs for first time homebuyers


FHA offers an adjustable rate mortgage which allows many people to buy a home with very low payments and down payment requirements. Useful if you have a debt to income issue or just want to buy more home.

HUD Homes

What is a HUD home? When someone with a FHA (HUD) insured mortgage can't meet the payments, the lender forecloses on the home. FHA then pays the lender what is owed; and HUD takes ownership of the home. Then they sell it at market value as quickly as possible. HUD uses an outside service to sell the homes via a auction format. You must use a Realtor to purchase a HUD of home. For additional information on buying repossessed homes located on the foreclosure page. For  search information on  foreclosed homes 

I have included a page on how to calculate your qualification ratios.

I have included a page on documentation requirements.

Be sure to visit the Mortgage Library.    I also have a report "Buying your First Home" available by email.

Learn more about improving your credit scores

As a Certified Mortgage Planning Specialist, I offer an analysis of your situation today can make suggestions on how small changes in how your debt is structured today can have a life changing effect in the years to come.  Read more about this free, no obligation service.

Prequalify for your Government program for first time homebuyers. 


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