Are you a first-time homebuyer looking to buy in Oregon? If so, what type of home loan product should you get? In this article, we’ll look at the different loan products available to help you narrow down your options.
First-time home buyers tend to have a lot of questions when it comes to mortgage financing. It can be a challenge to be in this demographic, as you have no proceeds from the sale of a home to help finance a new home purchase. That’s why it’s important to understand what all your mortgage options are to see what can help you realize your dreams of becoming a first-time homeowner.
Today, we will address one of the most frequently asked questions: What is the best type of home loan for a first-time buyer in Oregon?
Best Loan for a First-Time Home Buyer: It Depends
The first thing to understand is that there is no single mortgage product that works best in all situations. Different home buyers have different priorities, budgets, and financing needs. As a result, the best mortgage options for one first-time home buyer might not necessarily be the best one for you.
The best strategy is to learn the pros and cons of different mortgage loans, and then choose the one that helps you achieve your specific financing goals.
Conventional vs. Government-Backed Mortgages
As a first-time home buyer in Oregon, you can choose between a conventional mortgage loan and a government-backed loan program.
A conventional home loan is one that is not insured or guaranteed by the federal government. This sets them apart from the government-backed programs, like FHA and VA, which do receive some form of government backing. (FHA loans, for example, are insured by the Federal Housing Administration.)
Generally speaking, the qualification criteria can be a bit more relaxed for the government-insured mortgage programs. That’s because lenders receive some degree of insurance protection from the government, allowing them to be more flexible with their qualification criteria.
The VA program is arguably the best type of mortgage loan for a first-time home buyer in Oregon who happens to be in the military or a veteran. This program offers 100% financing, which eliminates the need for a down payment. It allows eligible borrowers to put down little or no money while avoiding mortgage insurance at the same time.
Another way to avoid mortgage insurance is to use a conventional home loan with a down payment of 20% or more. Typically, when the loan-to-value ratio rises above 80%, mortgage insurance is required. That’s why some first-time home buyers in Oregon use conventional loans with a down payment of at least 20%.
They do this to avoid the extra cost of mortgage insurance. A larger down payment also reduces the size of the monthly payments, since you are financing less of the purchase price.
Reducing the Size of Your Down Payment
Of course, not all first-time buyers in Oregon can afford a 20% down payment. Fortunately, that level of investment is not always necessary. There are several mortgage options for first-time home buyers who cannot afford such a large down payment. FHA loans require only 3.5% down, while some conventional mortgage products allow for a minimum investment of 3%.
Borrowers could also use money contributed by a third party to offset the down payment expense. This is allowable under many of the mortgage programs available today.
Related: Buying with less than 5% down
Higher Loan Limits in 2024
As we’ve explained in recent blog posts, mortgage loan limits have increased in 2024 for first-time and repeat home buyers alike. The maximum limits were increased for all of the major mortgage programs, including conventional, FHA and VA.
In 2024, FHA loan limits in Oregon range from $498,257 to $724,500 for 1-unit dwellings. (These limits vary by the county due to regional variations in home prices.) Conforming loan limits for all counties in Oregon are set at $766,550 in 2024.
First-time home buyers in Oregon who need to borrow more than these limits can do so, as long as their income supports it. When a borrower takes out a conventional mortgage loan that exceeds the limits mentioned above, it’s known as a jumbo mortgage.
Related: How much can I borrow?
Need a Mortgage in Oregon?
Are you a first-time buyer in Oregon looking for a mortgage? Sammamish Mortgage can help! We offer a wide variety of mortgage programs and tools with flexible qualification criteria, including our Diamond Homebuyer Program, Cash Buyer Program, and Bridge Loans. We have been serving the entire state since 1992, as well as the broader Pacific Northwest region that includes Washington, Oregon, Colorado, and Idaho. Please contact us today with any financing-related questions you have.