Oklahoma First-Time Home Buying Assistance Programs for 2023

Oklahoma First-Time Home Buying Guide

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    By Kenny Zhu

    (Last Updated – 07/2022)

    Sooners buying homes will still find relative bargains but will be saddled with more expense than the year before.

    The median sale price of an Oklahoma home rose 15% year-over-year, to $242,400, as of May 2022, according to Redfin. This marked a rise in price of almost $30,000 in a year.

    While those numbers might sound intimidating, there is hope for first-time homebuyers in the form of down payment assistance and mortgage rate reductions.

    Who Is Considered a First-Time Homebuyer in Oklahoma?

    A first-time homebuyer is, of course, anyone who has never owned a home, but it is also anyone who has not had an ownership interest in a primary residence over the past three years, the Oklahoma Housing Finance Agency (OHFA) says.

    This mirrors the definition of first-time homebuyer established by the U.S. Department of Housing and Urban Development (HUD).

    To qualify for Oklahoma Housing’s homebuyer assistance plans, either you or your spouse will have to qualify as a first-time homebuyer unless you intend to purchase a home in a targeted area.

    Recommended: Step-by-Step First-Time Home Buyer Guide

    4 Oklahoma Programs for First-Time Homebuyers

    Both the Oklahoma Housing Finance Agency and Rural Enterprises of Oklahoma offer homebuyer assistance to individuals with low to middle incomes, first-time buyers, and those employed in jobs that serve the community.

    Here’s a rundown of the programs. But first, anyone interested in OHFA help can use this quick eligibility tool .

    1. Down Payment Assistance Gold Loan

    OHFA’s Gold Loan allows first-time homebuyers and people purchasing in targeted areas to obtain up to 3.5% of their first mortgage amount in the form of a grant when closing on an FHA, VA, USDA, or conventional mortgage loan.

    To qualify, you’ll need to apply directly through an OHFA-approved mortgage lender and meet the income limits by area and loan type. Also:

    Minimum FICO® credit score: 640-680

    Maximum debt-to-income (DTI) ratio: 45%

    The grant is subject to a recapture tax of up to 50% of your benefit if you sell your home within the first nine years of purchasing it.

    2. Down Payment Assistance Dream Loan

    OHFA’s Dream Loan allows both first-time and repeat homebuyers with higher incomes to obtain a grant of up to 3.5% of their total first mortgage amount.

    For those taking out a government-backed mortgage, the maximum income statewide is $150,000, no matter the household size. For conventional loan borrowers, the income limit depends on the county.

    Borrowers will be subject to a recapture tax if their home is sold within the first nine years of purchase.

    Minimum credit score: 640-680

    Maximum DTI: 45%

    3. OHFA Special Interest Rate Discount

    OHFA grants people who serve the community and are applying for a Gold or Dream Loan an additional 0.125% interest rate discount off their quoted mortgage rate.

    To be eligible for an interest rate discount, you must fall under one of the following OHFA employment categories:

    •   OHFA Shield: Eligible borrowers employed as firefighters, law enforcement officers, EMTs, and paramedics.

    •   OHFA 4Teachers: Eligible borrowers who hold a current Oklahoma teaching certificate and have an active contract with an accredited Oklahoma public or private school.

    •   State Employee: Eligible borrowers currently employed by an Oklahoma state agency.

    Minimum credit score: 640

    Maximum DTI: 45-50%

    4. REI Gift 100 Program

    Rural Enterprises of Oklahoma offers a competitive fixed-rate, 30-year first mortgage (FHA, VA, USDA, Fannie Mae HFA Preferred, or Freddie Mac HFA Advantage) and down payment/closing cost assistance to low-income families and individuals in Oklahoma.

    Depending on what type of mortgage loan you choose, the assistance can come in the form of a gift or a forgivable seven-year second mortgage. The amount of assistance offered can range from 3.5% to 5% of your total loan amount. Funds can be applied toward a borrower’s down payment, closing costs, or any other mortgage-related expenses.

    Minimum credit score: 640

    Maximum DTI: 45%

    How to Apply to Oklahoma Programs for First-Time Homebuyers

    To qualify for Oklahoma’s first-time homebuyer assistance, you’ll need to meet the prescribed income, credit, and DTI ratio requirements, which vary by program.

    OHFA Gold and Dream Loans

    If you think you qualify for an OHFA product, you can search for an approved lender near you and request an application for a Gold or Dream Loan.

    The lender will determine whether you qualify, and also may request documentation to confirm eligibility for an interest rate discount through the OHFA Shield, OHFA 4Teachers, or State Employee programs.

    REI Gift 100 Program

    To apply for the REI Gift 100 Program, you’ll need to contact an approved lender to see whether you qualify for down payment assistance based on your financial profile.

    When you’re ready to proceed with your mortgage application, you can get pre-approved by the lender for a mortgage and the down payment/closing cost assistance.

    Recommended: How to Afford a Down Payment on Your First Home

    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 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 by area.

    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 surviving spouses 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.

    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 website .

    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.

    Oklahoma First-Time Homebuyer Stats for 2022

    Here are some homebuyer statistics for the four key metropolitan statistical areas tracked by the U.S. Census Bureau’s latest community survey.

    MSA Average age Income
    Oklahoma-City 37 $86,962
    Tulsa 44 $79,130
    Lawton 40 $58,834
    Enid 29 $69,817

    Additional statewide housing stats from the Census Bureau:

    •   66.1% of Oklahoma’s housing units were owner-occupied as of 2021

    •   Median gross rent in 2021 was $818 per month

    •   Median monthly housing cost for owners with a mortgage was $1,246

    Additional Financing Tips for First-Time Homebuyers

    In addition to federal and state government-sponsored lending programs, while you’re crunching the numbers on projected mortgage payments, you might want to hone your knowledge about 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 of low and moderate means in Oklahoma can try to lasso mortgage and down payment assistance programs that can make buying a home more affordable. Other first-time buyers can look for a good fit among mortgages on their own.

    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.

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    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?

    They often 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.

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

    According to the state’s website, qualifying homebuyers in certain areas may be eligible for a federal tax credit of 50% of their mortgage interest paid, up to $2,000 per year. To be eligible, borrowers must be taking out a conventional home loan, fall within the program’s income guidelines, and pay a fee.

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

    Both the Oklahoma Housing Finance Agency and Rural Enterprises of Oklahoma offer down payment/closing cost assistance that can be paired with a VA loan to those who qualify.

    Other veterans can look into the federal VA loans described above.

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

    Oklahoma Housing has separate credit score requirements depending on whether you intend to apply for its Gold or Dream Loan, and for a conventional home loan or government-backed mortgage. The range is 640 to 680.

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

    io The average age of first-time buyers in Oklahoma is 37.5, based on an average of the four major Oklahoma metropolitan statistical areas surveyed by the U.S. Census Bureau.

    That’s a bit older than the national median of 33, according to the latest Profile of Home Buyers and Sellers published by the National Association of Realtors®.

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