Mortgage Options for First-Time Home Buyers in Eugene, Oregon

First-time home buyers in Eugene often face unique challenges when it comes to financing a home purchase. In fact, coming up with the funds needed for a down payment is often the biggest challenge for these buyers.

So let’s start with the good news. Some of today’s options include a low down payment mortgage in Eugene for first-time buyers, down to 3% of the purchase price in some cases.

This guide explains the mortgage options for first-time home buyers in Eugene, and other things you should know when buying a home.

Eugene Home Prices and Housing Affordability

When it comes to affordability, the Eugene real estate market can be summed up in a single sentence. It’s relatively affordable by Oregon standards, but a bit more expensive than the national average.

We can illustrate this by using median home prices for the local area, the state of Oregon, and the nation as a whole:

• Eugene, OR: $476,412
• Portland, OR: $538,294
• Oregon (statewide): $502,498
• United States: $362,481

These numbers will likely change by the time you read this guide. But they’ll still demonstrate the affordability level of Eugene, Oregon real estate market. In short, this market is more expensive than the national average, but cheaper than some Oregon cities.

But even in a fairly affordable housing market like Eugene, first-time buyers can struggle to afford the minimum down payment on a house. That’s why it’s important to choose the right home financing options in Eugene.

Mortgage Options Available for Home Buyers

You have a lot of financing options when buying a first home in the Eugene area. Two of your biggest choices have to do with government backing (or the lack thereof) and the interest rate structure of your loan.

Here are some of the mortgage products available to first-time buyers:

• Conventional loan: A regular home loan that’s not backed by the government. The minimum down payment ranges from 3% to 5% for most borrowers.
• FHA loan: A government-insured mortgage product popular with first-time buyers in Eugene. They offer a down payment as low as 3.5% along with flexible credit requirements.
• VA loan: A government-backed mortgage for eligible military service members and veterans. This program allows home buyers to finance the entire purchase price.
• USDA loan: A government-backed loan that’s mainly for low- to moderate-income home buyers in rural areas. It allows them to buy a home with little to no down payment.

In addition to these loan options, first-time home buyers can choose between two different types of interest rate structures.

• Fixed-rate mortgage: A loan with an interest rate that stays the same for the entire loan term. Your monthly payment will not change.
• Adjustable-Rate Mortgage (ARM): A loan with an interest rate that can change over time. This means your monthly payment could increase or decrease.

Note: These aren’t the only mortgage options available. Specialty loan products also exist, but they’re often geared toward real estate investors and property flippers, instead of traditional home buyers.

The Most Popular Loans for First-Time Buyers

Most first-time home buyers in Eugene (and elsewhere) use the standard 30-year fixed-rate conventional mortgage loan. It’s the most popular home loan in America, actually, because it offers stability and predictability over the long term.

Additionally, the 30-year repayment term allows borrowers to minimize their monthly payments when compared to a shorter-term loan like the 15-year fixed.

The down payment requirements for a conventional loan can vary due to a number of factors. But both Fannie Mae and Freddie Mac offer loan programs for first-time buyers with a down payment as low as 3% of the purchase price.

The FHA loan program is also popular with first-time buyers in Eugene, especially those with limited savings and/or past credit problems. This program offers a down payment as low as 3.5% for borrowers with credit scores of 580 or higher.

FHA loans in Eugene are insured by the government, which reduces risk for lenders. Because of this, lenders can be more flexible with their qualification criteria.

Why Getting Pre-Approved is So Important

Before you start the house hunting process, you should make a phone call to your Eugene mortgage lender first. You should know how much you can afford in a home purchase before making an offer on a home.

By getting pre-approved, you’ll find out how much you can potentially get approved for based on your current financial and credit profile. Plus, you’ll show sellers that you’re a qualified and serious seller, which can go a long way when the market is particularly competitive.

How to Choose the Right Financing Strategy

Mortgage loans are not a “one size fits all” kind of situation. Different borrowers have different financing needs, qualifications, and long-term goals. That’s partly why there are so many different types of first-time home buyer loans in Eugene, Oregon.

Here’s how to identify the best home loan option for your situation:

1. Assess your savings. Aside from VA and USDA loans in Oregon mentioned earlier, most mortgage loans require a down payment. You’ll probably have to pay some closing costs as well, which could add up to thousands of dollars. Determining how much money you have for these upfront expenses can help you choose a mortgage option.
2. Check your credit score. Your credit score can affect the types of loans you qualify for. First-time home buyers with lower credit scores often have to rely on the FHA loan program, while those with higher scores may have more financing options available.
3. Consider your financial priorities. Shorter repayment terms (like 15 years) usually have higher monthly payments, but a lot less interest paid over time. Longer terms, like the popular 30-year home loan, have lower monthly payments but higher interest. Identifying your priorities will help you choose the right option.
4. Consider the length of your stay. If you plan to stay in the home for the long term, a fixed-rate mortgage might be the best option. With this type of loan, your mortgage rate will never change. On the other hand, if you think you might move again in a few years, an ARM loan could allow you to secure a lower interest during those years.
5. Determine your eligibility. Some mortgages are limited to specific types of borrowers, while others are open to everyone. For instance, VA loans in Eugene are mainly geared toward military members, but the FHA program is open to all borrowers. Understanding eligibility rules and limitations will help you zero in on the right loan choice.

Need Financing For Your First Home in Eugene, OR?

Sammamish Mortgage has been offering a variety of mortgage options for first-time home buyers in Eugene and the rest of the state of Oregon, plus the broader Pacific Northwest. Please contact our knowledgeable staff if you need a loan to buy your first home in Eugene, OR!