Mortgage Loans For Recent College Graduates
Chances are if you've just graduated from college you don't have much money set aside for a down payment to buy a home. You probably haven't yet established a credit history either – another key factor lenders consider. But that doesn't mean you can't get a loan.
Although lender guidelines vary, generally, you may qualify for mortgage assistance if you are a first-time home buyer. You also may find it easier to get a mortgage loan if you apply to a special program that assists college graduates within a specified number of months after graduating. You must apply through a participating program lender and meet the program's and/or lender's income and credit requirements.
Government Assistance
Federal Mortgage Assistance
The Federal Housing Administration (FHA) and U.S. Department of Housing and Urban Development (HUD) offer programs to assist first-time home buyers with low or moderate incomes. As a college graduate starting out in an entry-level position that may be low paying, mortgage assistance programs offered by the federal government can help you meet eligibility criteria when you otherwise might not qualify for a loan. FHA loans consider your last two years of college or graduate school, including graduate assistantships, when looking at your employment history.
An FHA graduated payment mortgage is another option available to low- to moderate-income home buyers, such as recent college graduates, who expect their incomes to grow significantly within five to 10 years. Mortgage payments start out low and then increase annually for the number of years and at a rate of interest according to the terms of the loan agreement. Depending on whether you choose a 5- or 10-year plan, payments remain fixed after that time for the remainder of the loan repayment period.
State Mortgage Assistance
Some states offer special mortgage loan programs for recent college graduates. A program may offer down payment assistance or low-interest loans. Generally, a program funded by the state requires that you graduate from a college or university in that state. Depending on the state where you live, a mortgage assistance program may require that you buy a property located in a city that qualifies under the program.
Other states provide grants to graduates of colleges in those states. Grants normally are for a percentage of a home's purchase price. Some states, such as Ohio, will forgive the grant or loan after a certain number of years as long as you remain living in that state. To find out whether your state offers a special grant program or low-interest loans to recent college graduates who want to buy a home, contact your state housing authority or department of education.
Other Mortgage Loan Assistance
If you are looking to save money on a mortgage loan, joining your university credit union is another option. Whether you join as a student or after you graduate as an alumnus, you may qualify for a lower interest rate or a special mortgage program.
Additional deals that credit unions and other lenders sometimes offer to recent college grads include paying a lower loan origination fee and reductions in closing costs, especially if you graduate from a college or university in the area where the lender is located. You also may be able to save on the cost of home insurance by joining an alumni association. Many of these groups offer special insurance rates to their members.
For more information, talk to a bank like Doolin Security Savings Bank.
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