William Mulrow: State and Federal Programs Can Help First-Time Homebuyers

First-time homebuyers frequently enter the real estate market with high expectations about what they can afford to purchase with the amount of money they have on hand. The harsh reality of buying a home is that the costs associated with the home-buying process can quickly turn a buyer’s expectations into disappointment.

As William Mulrow and other real estate and finance professionals know, financing the purchase of a home can be an expensive and frustrating experience. This is particularly true for buyers with poor credit histories or without a lot of money for a down payment.

Federal and state mortgage programs geared toward first-time homebuyers make it possible for those with a poor credit history or no credit history to qualify for financing to acquire a home. Low down payment programs help people whose savings do not allow them to put 20 percent down on the purchase of a home.

The United States Department of Housing and Urban Development (HUD) offers programs with low down payments, low closing costs and relaxed underwriting criteria to accommodate first-time buyers or buyers with less than stellar credit histories. Loans through the FHA permit buyers to qualify with down payments as low as 3.5 percent of the purchase price. FHA programs also permit buyers to incorporate some or all of their closing costs into the amount financed.

The federal government can also assist buyers through special programs involving the sale of homes acquired by HUD in foreclosure proceedings. HUD’s Good Neighbor Next Door home ownership program offers 50 percent discounts off the list price of a HUD-owned home to teachers of pre-kindergarten through grade 12, firefighters, emergency medical technicians and law enforcement officers. The homes must be located in a designated revitalization area and the buyers must agree to occupy the homes as their primary residence for at least 36 months following the closing.


State programs are also available to assist buyers through low cost, low interest and low down payment financing options. For example, the New York State Housing Finance Agency and the State of New York Mortgage Agency offer programs with government backed mortgage loans at below market rates for first-time homebuyers and others who meet certain qualification guidelines.

New York mortgage programs include low interest fixed-rate 30-year loans, down payment assistance and flexible underwriting guidelines. As a public finance expert, William Mulrow knows that New York housing and mortgage programs target a broad spectrum of housing issues. The state’s community renewal programs work toward revitalization of downtown areas, job creation and economic development. Affordable housing programs in New York focus on low income, first-time, or active and honorably discharged military homebuyers.

Working through state-approved lenders, New York homebuyers have mortgage options making it possible to finance the purchase of new construction, existing homes or homes requiring rehabilitation. Innovative programs such as Homes for Working Families offer low-interest financing for construction or acquisition and rehabilitation of affordable housing funded by tax-exempt bonds issued by the state.