Oregon First-Time Home Buying Assistance Programs for 2022

Oregon First-Time Home Buying Guide

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    By Kim Franke-Folstad

    (Last Updated – 08/2022)

    If you’re a first-time homebuyer in Oregon, here’s some good news: Several programs — both statewide and local — offer help with finding an affordable mortgage or making a down payment.

    The not-so-good news? Though the hot market may cool in the months ahead, for now, Oregon home prices in general remain high. According to Redfin, the median selling price of a home in Oregon rose to $527,600 in May 2022. That’s a 12.3% increase in just 12 months.

    And in some communities, home prices are much higher. In Portland, for example, the median sales price in May 2022 was $600,000. In Bend, it was $750,000.

    Buyers may feel as if the keys to their first place are dangling further and further out of reach, but first-time homebuyer programs are available to qualifying purchasers in Oregon.

    Recommended: The SoFi Guide to First-Time Home Buying

    Who Is Considered a First-Time Homebuyer in Oregon?

    The answer to that question is broader than it might seem. For most programs offered in Oregon and elsewhere, applicants are considered first-time homebuyers if they haven’t owned a home for the past three years.

    4 Oregon Programs for First-Time Homebuyers

    Oregon Housing and Community Services (OHCS) provides programs for first-time homebuyers who might need help obtaining an affordable loan and/or coming up with a down payment. Because these programs were established to assist low- to moderate-income buyers, participants may have to meet certain income limits along with other criteria. There also may be a limit on how much the purchased home can cost. The home must be a primary residence.

    Oregon also has programs designed to help buyers save up for their first home, either through a tax-advantaged savings account or by matching savings contributions.

    Statewide programs include:

    1. OHCS Bond Residential Loan Program

    The Bond Residential Loan Program was created to help eligible Oregonians afford their first home. It offers qualifying borrowers a 30-year fixed-rate mortgage (conventional, FHA, VA, or USDA) with two assistance options:

    •  With the “Cash Advantage” option, borrowers get a competitive interest rate along with cash equal to 3% of their loan amount to help pay for home-buying expenses. (Borrowers cannot use these funds for the down payment on an FHA loan, but they can use the money for closing costs.)

    •  With the “Rate Advantage” option, borrowers get a mortgage with an even lower interest rate but no cash assistance.

    Qualifications include:

    •  Income limits vary based on household size and the home’s location

    •  Purchase price limits vary based on location

    •  Down payment amount may range from 0% to 3.5%, depending on loan type

    •  For down payment assistance, borrowers typically must contribute at least $1,000 of their own funds

    •  Can be used for a single-family home, condominium, a unit in a planned unit development, or a manufactured home

    •  ​Co-signers are not allowed

    •  Assistance may be available to repeat homebuyers purchasing in a targeted area

    To apply: A approved lender can help you get started.

    2. OHCS Down Payment Assistance

    When funds are available, the OHCS also offers a down payment assistance program for low- to moderate-income families and individuals, and a percentage of those funds are reserved specifically for Oregon veterans.

    The OHCS Down Payment Assistance program was closed at the time of this writing, but the program website has a long list of partnering Homeownership Centers that may have funding for which you can qualify. (Each organization has its own terms and requirements.) You also may want to check the OHCS site occasionally to see if its down payment program funding has been replenished.

    3. First Time Home Buyer Savings Account

    First-time homebuyers in Oregon may benefit from setting up an tax-advantaged account that’s dedicated to saving toward a down payment on a single-family home.

    Once you open a First Time Home Buyer Savings Account at an Oregon financial institution, you can deduct any account deposits or earnings (up to $5,000 each year) from your Oregon taxable income. (For married couples filing jointly, the deduction can be up to $10,000 per year.)

    The funds must be used to purchase a single-family home within 10 years of when the account is opened. If the money in the account isn’t used to buy a house, there may be a 5% penalty and you may be required to add back to your income any amounts that were previously deducted.

    Account funds can be used for a down payment, closing costs, real estate agent fees, appraisal costs, and loan origination fees. To participate, you must open the account by Dec. 31, 2026.

    For more information, contact the Oregon Department of Revenue at 503-378-4988 or 800-356-4222.

    4. Oregon Individual Development Accounts

    Qualifying low-income Oregonians have another program designed to help them save for a home: It’s a matched savings account called an Individual Development Account .

    To participate, individuals enroll with a partnering organization; take courses in budgeting, investing, and saving; and, along the way, put their money toward a specific financial target (such as saving for a home or college). Once they reach their goal, and when all parts of the savings program are completed, the state matches their money — typically with $5 for every $1 saved.

    Oregon residents 12 and older who have a low income and modest net worth may be eligible. You can use the IDA search tool to find a provider in your community.

    Recommended: Understanding the Different Types of Mortgage Loans

    Other Oregon Homebuyer Programs by Location

    If you already know which Oregon city or county you hope to make your home, you also may want to research local buyer assistance programs.

    If you can’t find assistance in your chosen location, it may be helpful to check occasionally for new offers. Some first-time homebuyer programs base their opportunities (and deadlines) on the funds they expect to become available. When their funds run out, they may press pause.

    Some local programs include:

    NeighborWorks Umpqua Veterans Down Payment Assistance: Coos, Curry, Klamath, and Douglas Counties

    With the NeighborWorks Umpqua Veterans Down Payment Assistance program, first-time homebuyers in Coos, Curry, Douglas, Klamath, and Lake counties who are also military veterans may be eligible for up to $15,000 in grants for their down payment and closing costs.

    Qualifying applicants must fall below the HUD income limits for their household size and county, and they must complete a HUD-certified homebuyer education course.

    For more information on benefits and requirements, and to get your name on the “interest list,” you can go to the program’s web page .

    NeighborImpact/First Story Affordable Home Program: Deschutes County

    Residents of Deschutes County who are struggling to find an affordable home may want to check out a program that is available to first-time homebuyers who want to live in the city of Sisters.

    This partnership between NeighborImpact’s HomeSource and First Story offers qualified applicants the opportunity to purchase a newly constructed home with a 30-year, 0% interest mortgage and no down payment. There are income limits (based on household size), you must be a first-time homebuyer, and you must currently live or work in Sisters (preferred) or Deschutes County.

    You can get more information and an application on the program’s web page .

    Rogue Valley Association of Realtors/Oregon Association of Realtors HOME Foundation First-Time Homebuyer Assistance Program: Jackson and Josephine Counties

    The RVAR/OAR HOME Foundation Buyers Assistance Grant offers first-time buyers who purchase a primary residence in Jackson or Josephine counties up to $2,500 toward their down payment, closing costs, and/or prepaid items. Homebuyers must contribute a minimum of $500 of their own funds toward the purchase.

    This is a non-repayable grant offered through the Access Home Ownership Center, and applicants must take a homebuyer education course, meet with an Access counselor, and meet household income limits and other requirements.

    For information, you can check out the Access web page or call (541) 774-4305.

    How to Apply to Oregon Programs for First-Time Homebuyers

    Links to participating lenders and other contacts are listed under each program.

    Recommended: Understanding Mortgage Basics

    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 mortgage limits by area 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, 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 , 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.

    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

    Ever wonder where you fit amid the mix of buyers who are out there shopping for their first home or first in a while? Here are some stats from a recent National Association of Realtors® Profile of Home Buyers and Sellers:

    Percentage of buyers nationwide who are first-time buyers: 34%

    Median household income of first-time buyers nationwide: $86,500

    Type of home purchased by first-time buyers nationwide:

    •  Detached single-family home: 80%

    •  Townhouse/rowhouse: 9%

    •  Condo/apartment (five or more units): 1%

    •  Duplex/condo/apartment (two to four units: 2%

    •  Other: 8%

    Median home price for first-time buyers nationwide: $252,000

    Median down payment for first-time buyers nationwide: 7%

    Median age of first-time buyers nationwide: 33

    Relationship status of first-time buyers nationwide:

    •  Married: 50%

    •  Single females: 20%

    •  Unmarried couples: 17%

    •  Single males: 11%

    First-time buyers with kids nationwide:

    •  No children: 70%

    •  One child: 15%

    •  Two children: 11%

    •  Three or more children: 5%

    Additional 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

    If you can qualify for one of the first-time homebuyer programs in Oregon, you may be able to reduce the costs of purchasing a home. Other first-time buyers can shop for a mortgage that suits their needs 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.

    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 many 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.

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

    Requirements may vary from one assistance program to the next, and some programs may use criteria other than credit scores to determine a borrower’s eligibility. You can check with the organization or lender offering first-time homebuyer assistance to get specific financial requirements.

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

    No. Oregon Housing and Community Services doesn’t administer a mortgage credit certificate program. Until recently, the city of Portland offered its residents a certificate, which allows qualifying borrowers to claim a portion of their annual mortgage interest paid as a federal credit every year for the life of their loan. But because of a lack of funding, the city is not offering the program at this time.

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

    Oregon Housing and Community Services and other organizations typically offer down payment assistance for veterans when funding is available.

    VA loans are available nationwide to eligible service members, veterans, and eligible surviving spouses.

    What is the average age of first-time homebuyers?

    According to the National Association of Realtors, the median age of first-time buyers is 33.


    Photo credit: iStock/benedek
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