Summary List Placement
- You may qualify for financial assistance from your state government if you’re buying your first home and have a low-to-moderate income.
- If you get a mortgage from a participating lender, you can receive cash toward a down payment or closing costs, plus tax credits.
- Some state first-time homebuyer loans are forgivable if you stay in the home for a certain amount of time; other states give grants, which you never have to repay.
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If you’re buying your first home, you might be eligible for financial assistance from your state government. States offer low-interest mortgages, cash for down payments and closing costs, and tax credits for borrowers at low-to-moderate income levels.
Find out what your state provides for first-time homebuyers:
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Programs in the Northeast
The Connecticut Housing Finance Authority gives loans for down payment assistance. You must borrow at least $3,000, but you can’t borrow more than the minimum down payment for your home.
You might find assistance specific to where you live through the Housing Development Fund.
You can receive 2% to 5% of your mortgage amount as a loan from the Delaware State Housing Authority, and put that loan toward a down payment or closing costs. You won’t pay interest, and you’ll pay back the loan when you move, refinance, or pay off your mortgage. You can also get up to $2,000 per year in tax credits.
The DSHA also offers reduced interest rates on mortgages if you’ve graduated with a higher education degree in the last three years.
The Chenoa Fund will lend you up to 3.5% for a down payment, and you’ll repay the loan over 10 years.
MaineHousing offers up to $3,500 toward closing costs or down payment assistance.
MassHousing provides a few programs for first-time homebuyers, including down payment assistance of either 5% of your mortgage or $15,000, whichever is less.
New Hampshire Housing offers a down payment assistance loan for up to 4% of your mortgage, which may be forgiven after four years if you meet certain criteria. New Hampshire Housing also has a tax credit program and loans for home rehabilitation.
You can get up to $10,000 for down payment or closing cost assistance from the New Jersey Housing and Mortgage Finance Agency. This loan is forgivable after five years, and there’s no interest or monthly payments.
If you live in Trenton, you can get a loan for up to $15,000.
The State of New York Mortgage Agency has several programs for homebuyers, including a down payment assistance loan for up to $15,000. There’s no interest rate, and SONYMA may forgive the loan after 10 years.
You have several options from the Pennsylvania Housing Finance Authority, including down payment/closing cost assistance, tax credits, and programs specifically for borrowers with disabilities.
If you live in Centre County, you can receive a down payment assistance loan for up to $10,000.
You may qualify for a loan of up to $20,000 from the Housing Network of Rhode Island. The organization may forgive your loan after five years you borrow $15,000 or less, and after 10 years if you borrow more than $15,000.
Through Rhode Island Housing, you can receive either 6% of the home purchase price or $12,000, whichever is less. There’s also a tax credit program for up to $2,000 per year.
You might qualify for up to $5,000 toward down payment or closing cost assistance from the Vermont Housing Finance Agency. You won’t pay interest, and you don’t have to repay the loan until you sell your home, refinance, or pay off the mortgage.
Programs in the Southeast
The Alabama Housing Finance Association has down payment assistance programs for low-to-moderate income earners, and a tax credit program that can be combined with down payment assistance.
Get a mortgage through the Arkansas Development Finance Authority. It has a couple of down payment assistance programs and a tax credit program.
District of Columbia
You have a few options if you live in Washington DC. The DC Housing Finance Agency has programs for down payment and closing cost assistance, tax credits, and reduced insurance.
You can benefit from a down payment assistance program through the Florida Housing Finance Corporation, and enroll in a tax credit program.
Apply for a Georgia Dream loan from the Georgia Department of Community Affairs if you’re at a low-to-moderate income level. You’ll receive up to $5,000 toward closing costs — or up to $7,500 if you work in the healthcare, education, or public protector industries, are in the military, or have a family member with a disability.
If you live in Gwinnett County, you may qualify for a loan of up to $7,500 for a down payment from the Homestretch Down Payment Assistance Program.
Get a loan of up to $6,000 for closing costs or a down payment from the Kentucky Housing Corporation.
If you’re buying a home in Louisville, you might qualify for a down payment assistance loan from the local government. The government may forgive part of the loan.
The Louisiana Housing Corporation has several down payment assistance programs and a mortgage credit certificate program.
The Maryland Department of Housing and Community Development has several mortgage programs, including the Partner Match loan that can go toward your down payment or closing costs.
If you live in Baltimore, you can get assistance from the Housing Authority of Baltimore City.
The Mississippi Home Corporation has a tax credit program and down payment assistance of up to 3.5% of your mortgage. The corporation also gives down payment grants of up to $6,000 for teachers in certain counties and subject areas.
You may be eligible for a forgivable loan of up to $8,000 in down payment assistance from the North Carolina Housing Finance Agency. You can also get a tax credit for up to $2,000 per year.
You can get up a loan for up to 5% of your mortgage from South Carolina Housing. You can use the loan for down payment assistance for a conventional loan backed by Fannie Mae or Freddie Mac, and South Carolina Housing may forgive the loan.
If you’re buying a home in Lexington, you can receive a forgivable loan of up to $5,000 from the local government.
The Tennessee Housing Development Agency lends you between $6,000 and $7,500 for a down payment or closing costs. You’ll pay back the loan over 15 years.
Virginia Housing may give you a 2% to 2.5% grant for down payment assistance.
The Virginia Department of Housing and Community Development offers a grant for 10% to 15% of your home price for down payment assistance, plus up to $2,500 toward closing costs.
The West Virginia Housing Development Fund lends between $5,000 and $10,000 for closing costs or down payment assistance.
Programs in the Midwest
The Federal Home Loan Bank of Chicago may give you a $6,000 grant toward your down payment, closing costs, home buyer education programs, or repairs that come with buying a home.
The Illinois Housing Development Authority will lend you up to $10,000 for down payment assistance.
Receive 6% of the home purchase price for down payment assistance from the Indiana Housing and Community Development Authority.
FHLBank Indianapolis’ Homeownership Opportunities Program will give you up to $8,000 for a down payment.
The Iowa Finance Authority offers both grants and loans toward closing costs or down payment assistance. You can get up to $2,500 with a grant or up to $5,000 with a loan.
Kansas Housing offers down payment assistance loans. Borrow 15% or 20% of your home’s purchase price at no interest. Kansas Housing will forgive your loan if you stay in the home for 10 years.
The Michigan State Housing Development Authority will lend you up to $7,500 for down payment assistance.
You can receive a loan for up to $17,000 from the Minnesota Housing Finance Agency, and use the money for a down payment or closing costs. You can borrow an additional $10,000 with a Deferred Payment Loan, or $13,000 if you meet certain criteria.
You may receive up to 4% of your mortgage toward a down payment from the Missouri Housing Development Commission. The government will forgive your loan if you stay in the home for 10 years, with decreasing payments starting after five years.
The Community Action Agency of St. Louis County gives down payment assistance loans of $3,000 to $5,000, depending on where you live.
You can choose from several programs from the Nebraska Investment Finance Authority. Get a down payment assistance loan for up to $10,000, or a grant for up to $5,000.
You can receive down payment and closing cost assistance from the North Dakota Housing Finance Agency, as long as you put at least $500 toward the home purchase.
The Ohio Housing Finance Agency offers 2.5% or 5% for down payment assistance or closing costs. The loan is forgiven after seven years as long as you still live in the home and haven’t refinanced. The OHFA will forgive the loan after just five years if you’ve graduated from school in the last four years.
The OHFA has other programs for first-time homebuyers, too, including a tax credit program and lower interest rates on mortgages for those in public service.
You may receive up to 3% of your mortgage as a loan from the South Dakota Housing Development Authority. The loan can go toward a down payment or closing costs.
The Wisconsin Housing and Economic Development Authority will lend you up to $3,050 for either a conventional or FHA loan. There’s no interest rate or monthly payments.
Programs in the Southwest
The Arizona Industrial Development Authority gives you up to 5% of your mortgage for closing costs or a down payment.
You may qualify for assistance through the New Mexico Mortgage Finance Authority, including a loan for up to $8,000 toward closing costs or a down payment.
The Oklahoma Housing Finance Agency provides down payment assistance loans for 3.5% of your mortgage. You may get a reduced interest rate if you’re a teacher, state employee, or first responder.
If you live in Oklahoma City, you may qualify for up to $15,000 toward down payment or closing cost assistance from the local government.
The Texas State Affordable Housing Corporation offers down payment assistance loans, up to 5% of your mortgage.
Or get a loan for up to 5% of your mortgage and/or a tax credit from the Texas Department of Housing and Community Affairs.
Programs in the West
The Alaska Housing Finance Corporation has a down payment assistance program, and a closing costs assistance loan that contributes up to 4% of the total home price to your closing costs.
You can receive up to $10,000 in down payment assistance through the California Housing Financial Agency MyHome Assistance Program.
The Southern California Home Financing Authority gives down payment and closing cost assistance to residents of Los Angeles County and Orange County.
The Colorado Housing and Finance Authority gives grants for a down payment or closing costs. You can receive up to 3% of your home loan, and you don’t have to pay back the loan.
If you live in Aurora, you can apply for the Aurora Home Ownership Assistance Program, which lends you up to $10,000 for a down payment or closing costs.
You may be eligible for the tax credit program through the Hawaii Housing Finance & Development Corporation.
With the Idaho Housing and Finance Association, you can receive down payment and closing cost assistance, and tax credit assistance.
Montana Housing has a few options for first-time homebuyers, including a down payment/closing costs loan for up to $10,000.
Receive a down payment assistance loan for up to 2% of your mortgage from the Nevada Housing Division. The Home is Possible loan is forgivable if you stay in the home for at least seven years. You may receive more assistance from the Home is Possible program if you’re a teacher or military veteran.
Oregon Housing and Community Services lends up to $15,000 for down payment/closing cost assistance in certain counties.
You may receive a loan of up to 6% of your mortgage as down payment or closing cost assistance from the Utah Housing Corporation.
The Washington State Housing Finance Commission has several down payment assistance programs that will loan you up to $10,000. You may get up to $15,000 if a member of your household is disabled.
The WSHFC website also lists programs for specific cities.
The Wyoming Community Development Authority will lend you up to $10,000 for down payment assistance. There’s no interest rate, and you’ll pay back the loan when you sell or refinance the home, or after you’ve completely paid off the mortgage.
What is a first-time homebuyer program?
A first-time homebuyer program is for borrowers who want financial assistance toward purchasing a home. Although most of the programs on our list are referred to as “first-time homebuyer programs,” many state governments consider you to be a first-time buyer if you haven’t owned a home in the last three years.
There are several types of programs for novice homebuyers:
Mortgages for new buyers typically come with more lenient restrictions surrounding your credit score and debt-to-income ratio, and some even offer reduced interest rates. For most of the programs listed, you need to get a mortgage through a government agency to qualify for any of its other first-time homebuyer programs.
Many companies offer down payment and/or closing cost assistance. Usually, you’ll receive a predetermined dollar amount, and you have the choice to put the money toward either your down payment or closing costs.
Down payment/closing cost assistance can be given either as a loan or as a grant. You have to pay back a loan, but some organizations fully or partially forgive the loan after a certain amount of time. Some require monthly payments, and others ask you to repay the loan when you sell or refinance the house, or when you completely pay off your mortgage. You do not have to repay a grant — it’s a gift from the state.
Some states have tax credit programs, which let you claim credits on your federal taxes and save money. A program lets you claim a percentage of the interest paid on your mortgage that year, up to a certain dollar amount. For example, you might be able to claim 50% of the interest paid, up to $2,000 per year.
You should be able to combine programs from the same government agency. For example, if your local government offers both down payment assistance and tax credits, you can apply for both, assuming you’re eligible. But you might not be able to combine assistance programs from two separate organizations.
How to apply for a first-time homebuyer program
You don’t apply for a program directly through the government agency or department that’s offering it. Instead, you visit a lender that offers loans through that organization. For example, if you live in South Dakota, you’ll apply for a mortgage through an SDHDA-approved lender.
You’d find the list of participating lenders on the SDHDA website and apply for a South Dakota mortgage with the lender you choose. The lender is also the one who will approve and process any applications for down payment assistance, closing cost assistance, or tax credits.
Most agencies provide a list of participating lenders on their websites.
It’s common for the government to limit which type of mortgages qualify for assistance. Many require you to get a 30-year fixed-rate mortgage to receive further assistance.
Many states require you to attend a homebuying educational course before receiving assistance.
Other first-time homebuyer programs
Choosing a state-sponsored program is a great way to get assistance as a first-time homebuyer, but you have other options.
Government-backed loans — including ones backed by the FHA, VA, or USDA — let you buy a home with smaller down payments, higher debt-to-income ratios, and lower credit scores than conventional loans. You can also get major discounts if you fall into specific categories. For example, you could get 50% off the listed home price through the Good Neighbor Next Door program if you’re a teacher, firefighter, law enforcement officer, or emergency medical responder who lives in a “revitalization area.”
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Originally published at https://www.businessinsider.com/personal-finance/first-time-homebuyer-programs-by-state on .