Can Government Programs Help Boost First-Time Homebuyer Sales?
When the housing bubble and economy crashed, demand for housing fell across the board, with first-time homebuyers in particular becoming reticent to buy. The federal government had tried turning this trend around by creating a number of helpful programs for these buyers. Promoting and coordinating with these various programs could be a key for lenders to continue to make headway into the first-time homebuyer market.
Lower down payments for GSE loans
Fannie Mae is Federal National Mortgage Association (FNMA) and Freddie Mac is Federal Home Loan Mortgage Corporation (FHLMC) are the principal government-sponsored enterprises designed to make mortgages more affordable. These organizations back mortgage loans, allowing lenders to take on applicants who may not be fully qualified for conventional mortgages. However, these programs have a wide range of requirements, so not everyone can qualify.
To help the housing market, Fannie and Freddie have recently lowered the 5 percent down payment requirement to 3 percent upfront. However, this lower standard is only available for first-time homebuyers and low-income buyers to help boost homeownership in these groups.
Supporting first-time military homebuyers
The military has always been a large source of employment for many young Americans. As these potential first-time buyers return from service, VA Purchase Loans may allow them to borrow up to 100 percent of their home’s purchase price with no down payment. VA loans also don’t require mortgage insurance, which lowers costs. These loans have seen steady growth throughout the weak housing market, making this a key, and generous, government program to promote to qualified first-time military buyers.
USDA-supported loans for rural first-time homebuyers
The United States Department of Agriculture (USDA) Rural Development Single Family Housing Guaranteed Loan Program is another helpful and often underutilized government program for first-time buyers. In short, it allows qualified buyers to borrow up to 100 percent of their new home’s purchase price, eliminating the need for a down payment.
The term “rural development” is often misleading for potential buyers, but housing prospects don’t need to be in the countryside to qualify. Many loans are also available for small towns and city suburbs. Start doing your research to see if your potential homebuyers may qualify for a USDA home loan.
Promotion and program education
While many first-time homebuyers become discouraged after they can’t qualify for a conventional mortgage, the government has provided a series of programs to help turn the tides for many individuals in the first-time buyer market. With the hard work already done in stabilizing these programs in our economy, lenders can benefit by continuing to educate their prospects.
Equifax can help you better target your marketing with their latest trended credit data for potential first-time homebuyers. This information can help you identify potential candidates so you can focus your resources on deciphering who would gladly take advantage of these programs. Raising awareness for these government programs in your marketing campaigns can boost your sales and help fulfill the dreams of your customers as they receive the keys to their first home.
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