There are benefits to being a First Time Home Buyer. I will be going over what some of those benefits are but first I want to explain what a First Time Home Buyer actually is. By definition with the lenders, and the government, a First Time Home Buyer is someone that hasn't owned a home in the last three years. In some cases, that includes manufactured homes on rented land, in others, it doesn't. Also, there can be exceptions from someone coming out of a divorce.

First benefit: The cities of Eugene and Springfield both have programs for First Time Home Buyers to assist with down payment and closing costs. In Eugene it is HAP. In Springfield, it is SHOP. I covered a lot of information on these programs in a previous blog. If someone can qualify for the program (income limited), up to $10,000 is available on a no interest, no payment loan. Fantastic program! It also requires homeowner education that is handled by NEDCO, a local non profit. You can read about NEDCO here. NEDCO can also help with saving for that new home with an individual development account.

Second benefit: The USDA has a moderate income program called Rural Development that is available for people purchasing outside the urban growth boundaries of Eugene/Springfield. This product offers 100% loan to value (LTV) financing of eligible properties. It is also in most other counties of the state, including some incorporated cities. For instance, Cottage Grove, Creswell and Florence are some of the areas of Lane County that qualify. Check out this posting for more information about the USDA program.

Third benefit: For a few more days, FHA loans are on a risk based pricing formula for mortgage insurance. If you would be paying the higher tiered MI of 2.25%, as a first time home buyer, you would qualify for 2%. Realistically, it will all be changing Oct. 1, so this might not be as big of a point then. FHA offers 97% LTV financing currently but will be changing to require a 3.5% investment, with no LTV restriction. Find out about FHA loans here. FHA loans are not limited to First Time Home Buyers.

Oregon also provides a program similar to HAP and SHOP for areas outside the urban growth boundaries. It is called PAL (Purchase Assistance Loan). Unfortunately, it is out of money for those loans currently and will probably be that way for some time. Additionally, when they have money, it generally goes pretty quickly.

Oregon also offers the Oregon Bond program for First Time Home Buyers. It is offered at a subsidized interest rate which has tax recapture when paid off. Currently, the rate is not competitive, but I am sure that will change, it just hasn't had time to catch up with the market. You can find out more information about this product here. Just like FHA loans, the Oregon Bond does not make the loans, they just offer the lower (most of the time) interest rate. You will need a mortgage lender, like me, to make the loan. A word of caution, oftentimes, this is not the best product due to the recapture structure. It can also be quite restrictive in underwriting.

Federal VA loans also offer 100% LTV financing but are not limited to First Time Home Buyers. As a U.S. Air Force veteran, I purchased my homes with VA loans and think it is really the best program out there. There is also an Oregon Department of Veteran's Affairs loan that generally doesn't compete due to the down payment requirements. If you are interested either loan product, I can supply it also.

With all of these programs and others available and the recent drop in interest rates, now is the time to be thinking seriously about purchasing a home. Remember, the reason to buy a home is so you have a place to live with your family, but it is also one of the best wealth generators available.