Idaho First-Time Home Buying Assistance Programs & Grants for 2024

Idaho First-Time Home Buying Guide

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    By Walecia Konrad

    (Last Updated – 03/2024)

    The Gem State’s relatively affordable and attractive housing has been luring both local first-time homebuyers and residents from nearby high-cost states like California for years. In February 2024 home prices were up 8.4% year-over-year with the median home price hitting $484,100, according to Redfin.

    The decline of available properties for sale continues to fuel demand in Idaho. The number of homes for sale dropped close to 20% year over year. To find your footing when you’re working with a tight budget in this competitive market, it helps to be familiar with the programs available to first-time homebuyers in Idaho.

    4 Idaho Programs for First-Time Homebuyers

    Let’s take a closer look at many of the first-time homebuyer programs available in Idaho, including those that welcome buyers who have low incomes, limited down payments, and less-than-stellar credit scores. If you aren’t sure where you want to settle in the state, consider looking in one of the best affordable places to live in Idaho.

    The Idaho Housing and Finance Association is a private mortgage lending institution that administers affordable housing resources in Idaho, including first-time and repeat buyer down payment assistance programs and conventional and government-insured mortgages for low-income homebuyers. Examples include:

    1. Idaho Housing First Loan

    These FHA, VA, or USDA loans are available for homebuyers who earn less than $150,000. Completing a homebuyer education course is mandatory for most Idaho Housing First Loan borrowers. Prospective borrowers are asked to connect with a Idaho Housing preferred lender to learn more.

    2. Idaho Heroes Loan

    Teachers, firefighters, nurses, paramedics, EMTs, law enforcement officers, military members, and veterans can qualify for the low-interest Idaho Heroes second mortgage at a rate that is 0.125% lower than standard down payment assistance. The minimum borrower contribution is also waived. To check eligibility for this program, the first step is to find a lender .

    3. Idaho Down Payment Assistance Programs

    Idaho Housing and Finance provides homebuyers up to 10% of the sales price of the home to use for a down payment and/or closing costs. Idahoans who use this program can contribute as little as 0.5% of the sales price of their own funds to the purchase. The down payment assistance funds are loaned via either a second mortgage or a forgivable, zero-interest loan.This program is available to qualified buyers with a household income under $150,000, even if they are not first-time homebuyers.

    Recommended: How Much Is a Down Payment on a House?

    4. Idaho Mortgage Credit Certificate

    Idaho’s mortgage credit certificate (MCC) allows homebuyers to claim a credit on their federal taxes for 35% of the mortgage interest they pay each year, up to the federal limit of $2,000 each year.

    Borrowers must live in the home and meet certain income requirements based on the county, sales price limits, loan type, and first-time homebuyer status. They may use any additional interest paid for the federal mortgage interest tax deduction if they itemize. Lenders can help buyers determine if they are eligible for the credit. (More information on MCCs is below.)

    Who Is Considered a First-Time Homebuyer in Idaho?

    In Idaho, first-time homebuyers are considered those who haven’t owned a primary home in the past three years. (For married couples, if either spouse meets the test, they are considered first-time homebuyers, according to the federal definition. Also included are single parents who owned a home with a former spouse, and displaced homemakers who owned a home with a spouse.)

    First-time homebuyer assistance almost always applies to a primary residence only. Investment properties and second homes usually do not qualify. To apply for many (but not all) of the first-time homebuyer programs in Idaho, residents must take a course, which includes information about mortgage programs, managing your credit score, determining how much house you can afford, applying for a mortgage loan, and closing.

    If a home buying course is required, best to take it early in the process. In some cases, you won’t be able to close on the house until you’ve shown proof of attendance.

    Recommended: Do You Qualify as a First-Time Home Buyer?

    How to Apply to Idaho Programs for First-Time Homebuyers

    The best way for Idaho residents to get more information about what loans and grants are available is to visit the Idaho Housing and Finance Association website.

    Once you’ve determined which programs may be a good fit for you, you’ll want to estimate how much you can afford in mortgage payments and then compare lenders. It’s important for first-time homebuyers, who may be unfamiliar with the mortgage borrowing process, to compare several lenders’ requirements, rates, and terms to make sure they’re getting the best loan available for their financial situation.

    Recommended: Understanding the Different Types of Mortgage Loans

    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 FHA loan program. Loans have competitive interest rates and require a down payment of 3.5% of the purchase price for borrowers, who typically need FICO® credit scores of 580 or higher. Those with scores as low as 500 must put at least 10% down.

    In addition to examining your credit score, lenders will look at your debt-to-income ratio (DTI, your monthly debt payments compared with your monthly gross income). FHA loans allow a DTI ratio of up to 50% in some cases, vs. a typical 45% maximum for a conventional loan.

    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. For a $300,000 mortgage balance, upfront MIP would be around $5,250 and monthly MIP, at a rate of 0.55%, would be around $137. You can learn more about these loans, including FHA loans for refinance and rehab of properties, by reading up on FHA requirements, loan limits, and rates.

    Freddie Mac Home Possible Mortgages

    Very low- and low-income borrowers may make a 3% down payment on a Home Possible® 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.

    Fannie Mae HomeReady Mortgages

    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.

    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, which can be used to buy, build, or improve homes, have lower interest rates than most other mortgages and don’t require a down payment. Most borrowers pay a one-time funding fee that can be rolled into the mortgage.

    Another benefit of VA loans is that they do not require private mortgage insurance (PMI) for borrowers who make a down payment of less than 20%. And they have more flexible credit score requirements. In some cases, even those who have previously been in foreclosure or bankruptcy can qualify.

    Borrowers applying for a VA loan will need a Certificate of Eligibility from the VA so make sure to review a guide to qualifying for a VA loan as a first step in the process.

    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.

    US Department of Agriculture (USDA) Loans

    No down payment is required on these loans that are guaranteed by the USDA in specified rural areas. Borrowers must also meet USDA income requirements. Mortgage insurance is paid with upfront and annual fees. Eligible properties are listed by region on the USDA website . The Idaho USDA rural program guide can help you determine if you’re eligible for USDA assistance.

    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.

    Financing Tips for First-Time Homebuyers

    In addition to federal and state government-sponsored lending programs, there are other financial strategies that may help you become a homeowner. Some examples:

    •  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.

    The Takeaway

    First-time homebuyers in Idaho have options to make a home purchase more accessible and affordable. Idaho programs in hand with federal government lending initiatives may help prospective homeowners participate in this vibrant real estate market.

    Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

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    Should I take first-time homebuyer classes?

    Yes! First-time homebuyer classes can help demystify the homebuying process and prevent buyers from making expensive missteps. Indeed they are required for some government-sponsored loan programs. Check with your lender, real estate agent, local nonprofit housing advocacy groups, and state housing finance agency for programs in your area.

    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 Idaho?

    Yes. The Idaho mortgage credit certificate program allows homebuyers to claim a federal tax credit for mortgage interest, up to $2,000 each year. There are restrictions based on income, purchase price, and loan type. Lenders can help buyers determine if they are eligible for the credit and, if so, apply for it.

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

    The Idaho Home First Loan program includes VA loans for low-income buyers in specific counties. In addition, Idaho veterans may find options in the federal VA and Native American loan programs listed above, many of which are also available through the Idaho Housing and Finance Association.

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

    Most programs administered by the Idaho Housing and Finance Association require a credit score of 620 or above. But there are other private, state, and federal loan programs that borrowers with lower scores may be able to access.

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

    Data about Idahoans’ age is sparse, but the average age nationally is 35.

    Photo credit: iStock/SeanPavonePhoto

    *SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

    ¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.

    †Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.

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