Owning a home has been the ultimate dream of every Indian. But this is the 21st century and considering the economy of the country, buying a home doesn’t seem to be an easy task. If you are a first-time homebuyer, you need to be well aware of how a home loan works in today’ scenario.
Taking a home loan is the only logical way for a person in his 30s or 40s to afford a home for himself and his family.
When you opt for a home loan, almost 60-65% of your salary goes in paying the Equated Monthly Installments (EMI) for almost close to 30 years. Hence, it is important for you to take the right decision that will not affect your future.
So, being the first-time homebuyer, here are some home loan options for you.
1. Federal Housing Administration (FHA)
The Federal Housing Administration (FHA) insures that the loan lenders offer a good deal to first-time home buyers. It offers a down payment of 3.5% which is comparatively less than the regular 10-25%. You can be eligible for an FHA loan with a credit score as low as 500 but will be required to make a down payment of a minimum of 10%.
2. Veteran Loan (VA)
With zero down payments, no monthly PMI (Private Mortgage Insurance), and offer rates as low as 3.25% for a fixed 30-year loan, Veteran Loans seems to be a good option for first-time homebuyers. If you are currently serving the country or a veteran, you can be qualified for a VA loan through the Department of Veteran Affairs. For active members, the eligibility depends on having served for 90 days straight, while for veterans its 181 days.
3. Fixed Interest Rate Home Loan
This type of home loan has a fixed interest rate for the complete tenure of the loan. This means that even if there is a change in the economic market, the interest rates will remain the same. This kind of home loan can be beneficial for first-time homebuyers with a good budget as it comes with a fixed monthly payment structure.
4. Flexible Interest Rate Home Loan
The interest rate for this type of home loan is adjustable and varies depending on the market condition. These loans may change every two, three, five or seven years. Flexible interest home loans are comparatively cheaper than fixed interest rate loans depending on the stability of the market.
From looking for the perfect property to hunting for a convenient loan option, owning a home can be a highly rewarding experience. But having your own home brings stability to your family a well as your future.