Alaska First-Time Home Buying Assistance Programs & Grants for 2022

Alaska First-Time Home Buying Guide

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    By Susan Guillory

    (Last Updated – 07/2022)

    With its breathtaking natural beauty, clean air, and miles and miles of wilderness, Alaska, known as the Last Frontier, is a nature lover’s paradise. And it’s a good place to own a home: The housing market in the state is strong. From May 2021 to May 2022, home prices in Alaska increased 9.1%, according to Redfin, a real estate brokerage. The median home sale price rose to $367,400 year-over-year.

    There were also fewer homes for sale. The number of available houses in Alaska dropped 17.5%, which may account for the fact that nearly half of the homes that sold did so above list price.

    Still, as a first-time home buyer in Alaska, you may qualify for a low-interest mortgage or help with the down payment. Here’s what you need to know.

    Who Is Considered a First-Time Homebuyer in Alaska?

    For a number of the state’s programs, you’re considered a first-time buyer in Alaska if you haven’t owned a home in the last three years. You may also qualify if you meet U.S. Department of Housing and Urban Development (HUD) requirements, such as being a single parent who has only owned a home with a partner while married, or being a displaced homemaker who has only owned a home with a spouse. [As you consider your options for homeownership, this information on mortgage loans can be helpful.]

    5 Alaska Programs for First-Time Homebuyers

    Some of the programs for the first-time home buyer in Alaska offer different types of mortgage loans with low interest. Others provide assistance with down payments and closing costs.

    1. 1. AHFC: First Home Limited Loans

    This program, offered by the Alaska Housing Finance Corporation , offers low-interest mortgages to first-time home buyers. To qualify, you must meet income and purchase price limits and have not owned a home in the past three years, unless the home is within a targeted area or you are a qualified veteran.

    2. AHFC: First Home Loans

    Unlike the First Home Limited program, First Home does not have income or purchase price limits.

    To qualify, you must not have not owned a home in the past three years. To apply, contact an AHFC-approved lender .

    3. AHFC: Low-Income Borrowers Loans

    This program provides a lower interest rate on mortgages. To qualify, you must meet certain income limits and participate in a homebuyer education course.

    4. AHFC: Affordable Housing Enhanced

    Qualified buyers can get down payment assistance or secondary financing in the form of a grant, deferred payment, or forgivable loan through this program. You must participate in homebuyer education classes.

    5. NeighborWorks Alaska: Down Payment Assistance

    With this program offered by NeighborWorks, a nonprofit dedicated to creating housing opportunities, you may qualify for a loan to cover the 20% down payment required by many lenders. You can learn more here .

    How to Apply to Alaska Programs for First-Time Homebuyers

    If you’re a first-time home buyer in Alaska and you qualify for one of the programs we’ve covered, simply reach out to a lender who participates in that program to start your application.

    Recommended: This home buying guide will introduce you to state and federal programs that can provide financial assistance.

    Federal Programs for First-Time Homebuyers

    Several federal government programs are designed for people who have low credit scores or limited cash for a down payment. Although most of these programs are available to repeat homeowners, like state programs, they can be especially helpful to people who are buying a first home or who haven’t owned a home in several years.

    The mortgages are generally for single-family homes, two- to four-unit properties that will be owner occupied, approved condos, townhomes, planned unit developments, and some manufactured homes.

    Federal Housing Administration (FHA) Loans

    The FHA, which is part of the U.S. Department of Housing and Urban Development (HUD), insures mortgages for borrowers with lower credit scores. Homebuyers choose from a list of approved lenders that participate in the program. Loans have competitive interest rates and require a down payment of 3.5% of the purchase price for borrowers with FICO® credit scores of 580 or higher. Those with scores as low as 500 must put at least 10% down.

    Gift money for the down payment is allowed from certain donors and will be documented in a gift letter for the mortgage.

    FHA loans always require mortgage insurance: a 1.75% upfront fee and annual premiums for the life of the loan, unless you make a down payment of at least 10%, which allows the removal of mortgage insurance after 11 years. You can learn more about FHA loans in general and FHA lending limits in Alaska by county on the HUD website.

    Freddie Mac Home Possible Mortgages

    Very low- and low-income borrowers may make a 3% down payment on a HomePossible® mortgage. These loans allow various sources for down payments, including co-borrowers, family gifts, employer assistance, secondary financing, and sweat equity.

    The Home Possible mortgage is for buyers who have a credit score of at least 660.

    Once you pay 20% of your loan, the Home Possible mortgage insurance will be canceled, which will lower your mortgage payments.

    Learn more here .

    Fannie Mae HomeReady Mortgages

    Fannie Mae, or formally, the Federal National Mortgage Association, is a publicly traded government-sponsored enterprise that dates back to the Great Depression.

    Fannie Mae HomeReady® Mortgages allow down payments as low as 3% for low-income borrowers. Applicants generally need a credit score of at least 620; pricing may be better for credit scores of 680 and above. Like the Freddie Mac program, HomeReady loans allow flexibility for down payment financing, such as gifts and grants.

    For income limits, a comparison to an FHA loan, and other information, go to this Fannie Mae site .

    Fannie Mae Standard 97 LTV Loan

    The conventional 97 LTV loan is for first-time homebuyers of any income level who have a credit score of at least 620 and meet debt-to-income criteria. The 97% loan-to-value mortgage requires 3% down. Borrowers can get down payment and closing cost assistance from third-party sources.

    Unlike an FHA loan, the 97 LTV loan has no upfront mortgage insurance fee and does have cancellable mortgage insurance. The loan is for just one-unit single-family homes, co-ops, condos, and planned unit developments.

    Department of Veterans Affairs (VA) Loans

    Active-duty members of the military, veterans, and eligible family members may apply for loans backed by the Department of Veterans Affairs. VA loans, to buy, build, or improve homes, have lower interest rates than most other mortgages and don’t require a down payment. For most applicants, there is a one-time funding fee that can be rolled into the mortgage.

    Regional loan centers are closed to the public, but you can contact the Alaska Office of Veterans Affairs at [email protected]

    Native American Veteran Direct Loans (NADLs)

    Eligible Native American veterans and their spouses may use these no-down-payment loans to buy, improve, or build a home on federal trust land. Unlike VA loans listed above, the Department of Veterans Affairs is the mortgage lender on NADLs. The VA requires no mortgage insurance, but it does charge a funding fee.

    U.S. Department of Agriculture (USDA) Loans

    No down payment is required on these loans to moderate-income borrowers that are guaranteed by the USDA in specified rural areas. Borrowers pay an upfront guarantee fee and an annual fee that serves as mortgage insurance.

    The USDA also directly issues loans to low- and very low-income people. For loan basics and income and property eligibility, head to this USDA site .

    HUD Good Neighbor Next Door Program

    This program helps police officers, firefighters, emergency medical technicians, and teachers qualify for mortgages in the areas they serve. Borrowers can receive 50% off a home in what HUD calls a “revitalization area.” They must live in the home for at least three years.

    First-Time Homebuyer Stats for 2022

    •  First-time homebuyers nationwide: 34% of all home buyers

    •  Median age of first-time homebuyers in U.S.: 33

    •  Average down payment in Alaska (20%): $62,856

    •  Average home price in Alaska:$314,278

    •  Average credit score of home buyer in Alaska: 717

    Recommended: This mortgage calculator can help you figure out how much your monthly payments will be.

    Financing Tips for First-Time Homebuyers

    In addition to federal and state government-sponsored lending programs for the first time home buyer in Alaska, you might want to bone up on mortgage basics like how to choose mortgage term loans and how to lower your mortgage payment. These tips may help.

    •  Traditional IRA withdrawals. The IRS allows qualifying first-time homebuyers a one-time, penalty-free withdrawal of up to $10,000 from their IRA if the money is used to buy, build, or rebuild a home. The IRS considers anyone who has not owned a primary residence in the past three years a first-time homebuyer. You will still owe income tax on the IRA withdrawal. If you’re married and your spouse has an IRA, they may also make a penalty-free withdrawal of $10,000 to purchase a home. The downside, of course, is that large withdrawals may jeopardize your retirement savings.

    •  Roth IRA withdrawals. Because Roth IRA contributions are made with after-tax money, the IRS allows tax- and penalty-free withdrawals of contributions for any reason as long as you’ve held the account for five years. You may also withdraw up to $10,000 in earnings from your Roth IRA without paying taxes or penalties if you are a qualifying first-time homebuyer and you have had the account for five years. With accounts held for less than five years, homebuyers will pay income tax on earnings withdrawn.

    •  401(k) loans. If your employer allows borrowing from the 401(k) plan that it sponsors, you may consider taking a loan against the 401(k) account to help finance your home purchase. With most plans, you can borrow up to 50% of your 401(k) balance, up to $50,000, without incurring taxes or penalties. You pay interest on the loan, which is paid into your 401(k) account. You usually have to pay back the loan within five years, but if you’re using the money to buy a house, you may have up to 15 years to repay.

    •  State and local down payment assistance programs. Usually offered at the regional or county level, these programs provide flexible second mortgages for first-time buyers looking into how to afford a down payment.

    •  The mortgage credit certificate program. First-time homeowners and those who buy in targeted areas can claim a portion of their mortgage interest as a tax credit, up to $2,000. Any additional interest paid can still be used as an itemized deduction. To qualify for the credit, you must be a first-time homebuyer, live in the home, and meet income and purchase price requirements, which vary by state. If you refinance, the credit disappears, and if you sell the house before nine years, you may have to pay some of the tax credit back. There are fees associated with applying for and receiving the mortgage credit certificate that vary by state. Often the savings from the lifetime of the credit can outweigh these fees.

    •  Your employer. Your employer may offer access to lower-cost lenders and real estate agents in your area, as well as home buying education courses.

    •  Your lender. Always ask your lender about any first-time homebuyer grant or down payment assistance programs available from government, nonprofit, and community organizations in your area.

    Recommended: Use this home affordability calculator to see how much home you can afford to buy.

    The Takeaway

    The Alaska housing market is strong and home prices are up. However, there is still plenty of opportunity for qualified first-time homebuyers. The state offers programs that can help with the mortgage and down payment. Plus there are federal and conventional loans available that can assist you in your quest to purchase a home.

    Make your dream of being a homeowner come true with SoFi’s competitive mortgage rates and down payments as low as 3% for qualifying first-time homebuyers.

    View your rate


    FAQ

    Should I take first-time homebuyer classes?

    Yes! Good information is key to a successful home-buying experience for anyone, but especially for newcomers, who can easily be overwhelmed by the jargon, technicalities, and magnitude of applying for a mortgage and purchasing a home. First-time homebuyer classes can help. Indeed they are required for some government-sponsored loan programs.

    Do first-time homebuyers with bad credit qualify for homeownership assistance?

    Often they do. Many government and nonprofit homeowner assistance programs are available to people with low credit scores. And often, interest rates and other loan pricing are competitive with those of loans available to borrowers with higher credit scores. That said, almost any lending program has credit qualifications. That’s why it’s important to take all possible steps to improve your credit standing before you go house hunting.

    Is there a first-time homebuyer tax credit in Alaska?

    Yes, there is a mortgage credit certificate program for first-time homeowners and those who buy in certain areas in Alaska. With it, you can claim a portion of your mortgage interest as a tax credit, up to $2,000.

    Is there a first-time veteran homebuyer assistance program in Alaska?

    Yes. The U.S. Department of Veterans Affairs offers home loans to servicemembers, veterans, and eligible surviving spouses.

    What credit score do I need for first-time homebuyer assistance in Alaska?

    Credit score requirements vary, depending on the homebuyer assistance program. For example, if you have a credit score of 580 or higher, you may qualify for a lower interest rate on an FHA loan.

    What is the average age of first-time homebuyers in Alaska?

    In the U.S., the median age of first-time homebuyers is 33.


    Photo credit: iStock/toddmedia
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