Getting a good loan is always important, and it’s an especially big deal for first-time homebuyers. First-time buyers are often just getting on their feet financially, so they benefit from borrower-friendly loan features like easier approval and down payment assistance.

There are several ways to get a great deal on your first mortgage, including:

1) Using loan programs designed for first-time buyers

2) Shopping around and qualifying based on your strong credit score and income

While loans specifically designed for your first home purchase may sound appealing, they are not always a perfect fit. They often come with strings attached – which might or might not be deal breakers.

A first-time homebuyer loan is designed to help people become homeowners, usually in specific geographic areas. These programs vary depending on where you live and what’s available to you, but the general idea is to provide financial assistance to qualified buyers. Benefits come in several forms:

1) Down payment: The ability for buyers to make a very small down payment (or no down payment at all).

2) Interest cost: Organizations subsidize (or help to pay) interest charges, and they can also help borrowers qualify for a loan with a lower interest rate. The result is an easier monthly payment.

3) Grants: “Free money” that can be put towards closing costs, a down payment, and improvements to the home after purchase.

4) Loan forgiveness: cancellation of the mortgage debt (or at least some portion of the debt). This typically happens over a long period of time to encourage buyers to stay in the home long-term.

5) Help with fees: limits on how much lenders are allowed to charge for closing a loan.

6) Deferred payments: loans that don’t need to be repaid (and don’t charge interest) until you pay off the house, usually by selling the home and moving. These loans sometimes serve as your down payment.

7) Here are some of the most useful first-time home buyer programs that you might overlook if you rush the process.

FHA

This is the go-to program for many Americans, especially first-time home buyers and those who have a credit history that’s … let’s say shaky. The Federal Housing Administration guarantees a portion of home loans, which frees lenders to broaden their acceptance standards. With FHA backing, borrowers can qualify for loans with as little as 3.5% down. FHA loans do have an up-front and ongoing additional cost built in: mortgage insurance premiums. This protects the lender’s stake in the loan if you default.

USDA

This one may surprise you. The U.S. Department of Agriculture has a home buyers assistance program. And no, you don’t have to live on a farm. The program targets rural areas and allows 100% financing by offering lenders mortgage guarantees. There income limitations, which vary by region.

Good Neighbor Next Door

This initiative was originally called the Teacher Next Door Program but was expanded to include law enforcement, firefighters and emergency medical technicians, hence the snappy “Good Neighbor” name. A HUD-sponsored program, it allows 50% discounts on the list price of homes located in revitalization areas. Yes, half off. Who knew? You just have to commit to living in the property for at least 36 months. These homes are listed for just seven days — on the Good Neighbor Next Door sales website.

Down payment assistance programs are like free money … really. But most people overlook thousands of dollars available to them—because they don’t know to apply for down payment assistance. These programs offer loans, grants, tax credits, and other forms of aid that can help home buyers obtain down payments and pay for closing costs.

There are 2,290 down payment assistance programs across the country waiting for home buyers to apply for funds, according to a joint analysis recently issued by RealtyTrac, a real estate data provider, and Down Payment Resource, a purveyor of home-buyer assistance programs. The average amount of down payment assistance per buyer is $11,565, according to the analysis.

“It’s important for buyers to research down payment programs as part of their loan shopping process,” said Rob Chrane, president and CEO of Down Payment Resource. As a former real estate agent turned mortgage lender turned entrepreneur, Chrane started DPR to help bridge the gap between these programs and the home buyer.

The problem is, few people know his company exists—let alone that there is money out there to help them become homeowners.

“There’s a lot of missed opportunities here,” he said.

Of the 78 million single-family homes and condos in the United States, more than 68 million, or 87%, would qualify for a down payment assistance program, according to the report. Of course, not all of those houses are on the market. The report looked at parcels and matched them with county-, state-, and federal-level assistance programs.

In each of the 3,143 counties in this country, there is a down payment assistance program available, according to the report.

“Consumers do not know about these programs, and those that do assume it’s more difficult to get than it is,” said Jonathan Smoke, chief economist at realtor.com

If first-time buyers, particularly millennials, took advantage of these down payment assistance programs, Chrane said the housing market would see a boost in sales.

“Millennials are the key to the recovery,” said Smoke. “If real estate agents want the market to grow 8%, they have to work harder to support the first-time home buyer.”

While there will always be critics of any program that reduces the down payment requirement or provides funding assistance to qualify for homes, Smoke says that betting on qualified first-time buyers offers little risk. Most millennials—those aged 25 to 35—are employed and earning high incomes but lack the “wealth” or savings necessary to buy a home, he said. They are saddled with student loan debt but aspire to be homeowners.

For even more personalized ways to save money on your new home purchase, call Mitzi De La Cruz directly at (916) 871-8132!