First Time Homebuyer Benefits

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Buying a home may save you hundreds of dollars each month when compared to renting. If you’re ready to buy your first home, market conditions can help you along in this effort. There are also a number of first-time homebuyer programs specifically offered to help you make a purchase. Eligibility for these programs varies depending on income, location and property types.

Federal Programs

Several federal loan programs assist first-time homebuyers by providing special interest rates and low or no down payments. The Zero Downpayment Act eliminates the down payment requirement for qualified first-time homebuyers who purchase homes with FHA-insured mortgages. The American Dream Downpayment Assistance Initiative distributes $200 million annually for down payment assistance for eligible first-time homebuyers. And, if you buy a fixer upper, the FHA 203(k) rehabilitation loan provides special low-interest financing to help you restore home to move-in condition.

State and Local Programs

In addition to the federal programs, states provide benefits to help you purchase a first residence. The Mortgage Revenue Bond program offers low interest rates and financing up to 100 percent of your purchase price. Contact your local government, nonprofit housing agency or lender to find out which area organizations offer these down payment assistance programs to reduce your out-of-pocket closing costs.

Tax Benefits

As a first-time homebuyer, you can deduct the discount points applied to bring down your mortgage interest rate. You also can deduct the mortgage interest you pay throughout the year. Property taxes qualify as a tax deduction, however local tax refunds may reduce your deduction. Some states also offer the Mortgage Credit Certificate that gives you an ongoing federal tax credit.

Overall Benefits of Homeownership

Beyond the immediate incentives available to first-time buyers, homeownership brings benefits such as appreciation, equity and stability. Although appreciation isn't a guarantee, historically, homes have proven to be a good long-term investment. As your home's value rises, your debt decreases, building equity that you can use as collateral for other loans; equity may result in a profit if you sell your home. And, owning a home is the first step to building long-term stability in your community.