When American workers started quitting their jobs en masse during the pandemic, speculation placed Millennials and GenZ at the center of the economic trend. New data, which looks at gains from the pandemic housing boom, suggests there’s more to the story.
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By Kim Franke-Folstad
(Last Updated – 03/2024)
Utah is known for its amazing landscapes and parks, and it can also be a terrific place to live among all that natural beauty. But it’s not necessarily a cheap place to buy a property. The average home value is currently $501,653 vs. the average national number of $342,941, according to Zillow. For some first-time homebuyers in Utah, the high cost of housing can make putting down roots a challenge.
Fortunately, first-time homebuyers in Utah may be able to get some financial help through programs offered by the state and some cities and counties. There also are longstanding federal programs that could improve a buyer’s chances of success, as well as other options. Take a closer look at some of the opportunities here.
The answer to that question isn’t as obvious as it seems. For most programs offered in Utah and elsewhere, applicants are considered first-time homebuyers if they haven’t owned a home for the past three years.
Some programs may make exceptions for veterans, single parents, and others. It’s a good idea to be clear on specific eligibility standards before you start any application.
💡 Quick Tip: SoFi’s award-winning mortgage loan experience means a simple application — we even offer an on-time close guarantee. We’ve made $7.5 billion in home loans so we know a thing or two about what makes homebuyers happy.‡
The Utah Housing Corporation (UHC), also known as Utah Housing, provides several assistance options for first-time buyers who might need help affording a house, whether that concerns the specifics of their loan and/or coming up with a down payment.
Because the programs were established to assist low- to moderate-income buyers, participants may have to meet certain income limits and other criteria. There also may be a limit on how much the purchased home can cost.
These programs (some of which may also be available to repeat buyers) include:
If you’re a first-time homebuyer with a modest income looking for a low interest rate, the FirstHome Loan program may be for you. This program typically offers the UHC’s lowest available interest rate on a first mortgage, which may be paired with a second mortgage for down payment assistance. The FirstHome program is available only to qualifying first-time homebuyers who have a credit score of 660 or higher and meet income and purchase price limits.
The HomeAgain Loan program has similar benefits and requirements, but it is available to first-time and repeat homebuyers.
Type of Assistance: Lower-interest first mortgage with the opportunity to obtain a UHC down payment second loan that’s up to 6% of the first mortgage amount to be used for down payment and/or closing costs.
More information: UHC – Home Loans (utahhousingcorp.org)
To apply: An approved lender can help you get started.
The Score Loan program was created to help families who have recovered from previous credit challenges purchase a home. The program provides borrowers with a first mortgage and the opportunity to apply for a second mortgage of up to 4% of the first mortgage amount for down payment assistance and/or closing costs. It is available to both first-time and repeat buyers.
Type of assistance: First mortgage can be paired with a fully amortized, non-forgivable second loan with an interest rate that is 2% higher than the first mortgage and can be up to 4% of the first loan amount.
Qualifications:
• Minimum credit score of 620
• Must meet UHC income and purchase price limits
More information: UHC – Home Loans (utahhousingcorp.org)
To apply: An approved lender can help you get started.
Utah Housing has a grant program that benefits qualifying Utah veterans who are first-time homebuyers. The grant is for $2,500, and it doesn’t necessarily have to go toward the recipient’s down payment and closing costs.
Benefits and Qualifications include:
• Homebuyers can choose any conforming mortgage type, such as VA, FHA, Fannie Mae, or Freddie Mac
• Can use any lender licensed to originate mortgages in Utah
• Must be a first-time homebuyer in Utah (can have owned a home in another state)
• Must obtain Veterans Grant Status Validation from the Utah Department of Veterans and Military Affairs
• Lender must receive a Veterans Grant Reservation Agreement from Utah Housing prior to closing
• Funds are limited; it’s important to pay attention to all deadlines. Note: As of March 2024, funding was closed and applicants were asked to check back in June of 2024
More information: UHC – Grants for Veterans (utahhousingcorp.org) You also can contact the Department of Veterans and Military Affairs at 801‑326‑2372.
To apply: If more funding becomes available, take your Veterans Grant Status Validation to any lender licensed to originate loans in Utah and ask about a Utah Veterans Grant.
If you already know which Utah community you hope to make your home, you also may want to research local first-time homebuyer programs. If you can’t find assistance in your chosen location, you may want to check back occasionally for new offers. Some first-time homebuyer programs base their opportunities (and deadlines) on the funds they expect to become available. When their money runs out, they may press pause.
Layton City offers the At Home in Layton Down Payment Assistance Program to income-eligible first-time homebuyers. The assistance comes in the form of a grant in $10,000 increments that can be used for a down payment, closing costs, or principal reduction. If the purchased home is sold before the end of the fifth year after closing, all or a portion of the grant may have to be repaid to the city.
Funds are limited, and applications are accepted on a first-come, first-served basis, so it’s wise to check and see what is available. For more information, you can check out the program’s web page or go to the brochure for application guidelines . Contact the Layton City Community Development Block Grant administrator at 801-336-3770 or [email protected].
The Own in Ogden loan program provides qualifying first-time and repeat homebuyers with a 0% interest, deferred-payment second loan for their down payment or closing costs. The loan also can be used to reduce the principal on the buyer’s first mortgage.
• Homebuyers can receive $10,000 to purchase a primary residence in Ogden
• State-certified K-12 classroom teachers or administrators in schools that serve city students can receive a $15,000 loan
• Ogden employees and new hires who don’t currently live in the city can receive a loan of up to $15,000 to help them move there
• Ogden police officers and firefighters can receive a $20,000 loan Income and purchase limits apply. For more information, you can go to the program’s web page or go to the program brochure for application guidelines .
The Provo Home Purchase Plus Program offers eligible homeowners the opportunity to apply for a 0% interest, deferred-payment second loan to help pay their down payment and closing costs. Payment is due in full when the borrower no longer lives in the home as their primary residence. (If the home is sold or vacated within two years of purchase, there may be a $5,000 penalty.)
Income limits, asset limits, credit requirements, and purchase price limits apply, and all household members over 18 must pass a background check. For more information, check out the program’s web page or call 801-852-6160.
Utah County’s Loan to Own program provides down payment assistance to moderate-income first-time homebuyers in the form of a 0% interest, deferred-payment second loan. This loan is available up to $40,000 currently. The loan must be repaid if the owner vacates or sells the property, and there is a $5,000 penalty if the owner does so within two years of closing.
This program is available countywide except for Eagle Mountain, Alpine, Fairfield, and Provo. Buyers must contribute $1,000 of their own money toward the down payment. Income limits, asset limits, credit requirements, and purchase price limits apply. You can get more information at the program’s web page or call the Housing Authority at Utah County at 801-373-8333.
If you are interested in any of the above programs for first-time homebuyers in Utah, Follow the links under each program to check what funding is available and find an approved lender or other contact.
Recommended: Understanding Mortgage Basics
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 particularly 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.
The FHA, which is part of the US 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. Here are some details to note:
• 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 low credit scores (between 500 and 579) 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 57% in some cases, vs. a typical 45% to 50% maximum for a conventional loan.
• Using 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.
Interested in finding out moreJ? 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.
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 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, visit this Fannie Mae site .
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.
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. A few specifics:
• Most borrowers pay a one-time funding fee that can be rolled into the mortgage.
• VA loans do not require private mortgage insurance (PMI) for borrowers who make a down payment of less than 20%.
• These loans 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.
💡 Quick Tip: Apply for a VA loan and borrow up to $1.5 million with a fixed- or adjustable-rate mortgage. The flexibility extends to the down payment, too — qualified VA homebuyers don’t even need one!†^
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. Learn more about this mortgage option by emailing [email protected].
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 .
This program helps those in certain professions (such as 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.
Ever wonder where you fit amid the mix of buyers who are out there shopping for their first home (or the first one in a while)? Here are some stats to check out:
Percentage of buyers nationwide who are first-time buyers: 50%
Average credit score of a first-time homebuyer: 746
Average credit score in Utah: 731
Average age of a first-time homebuyer: 35
Average home value in Utah: $501,653
3% down payment: $15,049.59
20% down payment: $100,033.06
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 can take a bite out of 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.
Take note: 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 to 25 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.
Utah has an array of state and local assistance for low- to moderate-income first-time homebuyers. This can be in the form of help with a down payment, mortgage, and closing costs. Other first-time buyers may find an affordable choice among the various federal and commercial mortgages available.
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.
These classes can be advantageous, as they share valuable intel on the home-buying process. In addition, these classes are required for many government-sponsored loan programs.
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.
Utah Housing’s credit score requirements range from 620 to 660, but requirements for other programs vary, and some 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.
Utah Housing offers a first-time homebuyer grant program that’s specifically for veterans. Then there are VA loans, available nationwide to eligible service members, veterans, and eligible surviving spouses.
The median age is 35, according to recent data
Photo credit: iStock/DenisTangneyJr
*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.
†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.
^SoFi VA ARM: At the end of 60 months (5y/1y ARM), the interest rate and monthly payment adjust.
At adjustment, the new mortgage rate will be based on the one-year Constant Maturity Treasury (CMT) rate, plus a margin of 2.00% subject to annual and lifetime adjustment caps.
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.
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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
By Susan Guillory
(Last Updated – 03/2024)
With its proximity to Washington, D.C., Baltimore, and Pittsburgh, West Virginia is a popular place to live. The Mountain State also has some of the lowest home values in the nation.
The housing market in West Virginia, however, has heated up: From January 2023 to January 2024, the number of homes sold rose almost 8% and the median sale price rose 4.5%, to $297,600, according to Redfin, a real estate brokerage that analyzes housing market data across the country.
If you’re a first-time homebuyer in West Virginia, know that city, state, and federal programs may be able to help you purchase your first home. With luck you’ve crunched numbers on a mortgage calculator, know your credit score, understand mortgage basics, and you’re ready to go.
Understanding the definition of a first-time homebuyer in West Virginia can help you determine if you’re eligible for assistance. At first glance, you might assume it means never having owned a house ever, but in most counties, and nationwide, it also means you haven’t owned a primary home in the past three years.
With most state assistance programs, veterans also qualify, and buyers in “targeted areas” do not have to be first-time homebuyers.
Recommended: First-Time Home Buyer Guide
Most first-time homebuyers will need a home mortgage loan. Let’s start by looking at state programs for first-time and repeat buyers in West Virginia. These programs generally are designed for people with low to moderate incomes or who are in certain demographic groups..
This program provides lower-interest fixed-rate loans with 30-year terms for first-time buyers. Up to 100% of the home can be financed. Some first-time homebuyers in West Virginia may also qualify for the down payment and closing cost assistance program. Borrowers may be required to participate in homebuyer education.
You can get current rates for the program, as well as household income and house price limits here .
Another program offered by the West Virginia Housing Development Fund is the Movin’ Up Program, which helps first-time or repeat buyers purchase a new home. Income must be $130,560 or under for a one- or two-person household, and $152,320 or under for households with three or more members. Home purchase price limits apply, as above.
View current rates and income and house price limits for Movin’ Up here .
Down payment and closing cost assistance loans up to $8,000 are available with the Homeownership and Movin’ Up programs in the form of a 15-year loan with a current rate of 2%.
Lower-income first-time buyers looking to purchase a house in Charleston or Kanawha County may want to look into the Home Blend program , which offers forgivable loans of up to $128,000 with a 10-year repayment term at 0%. The borrower takes out a mortgage from a participating lender for 80% of the purchase price; the additional 20% is provided as the 0% loan forgiven monthly.
Borrowers are required to invest a minimum of $500, have “acceptable” credit, and complete a homebuyer education workshop.
If you’re a first-time homebuyer looking at a home in Martinsburg or Berkeley, Jefferson, or Morgan counties, you might want to look into deferred no-interest loans that can be used for a down payment and closing costs. The loan may be forgiven if you live in the home for the five-year loan period.
To qualify, you must meet income limits, prequalify for a mortgage, and invest a minimum of $500 toward the purchase of a home.
The city of Parkersburg may provide up to $15,000 as a forgivable loan to eligible and approved homebuyers to cover the costs of a down payment and closing cost expenses.
To apply for the West Virginia Housing Development Fund Homeownership or Movin’ Up programs, contact participating lenders . You may want to compare fees and offerings to find the best fit. Applications for other programs are on program websites, and often include a phone number you can call with questions. Prepare to apply by gathering your financial documents, including your most recent tax return.
Make sure you only apply for a mortgage for a home you can afford. This home affordability calculator helps you figure out how much home you can afford, based on your income and expenses.
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.
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 (DTI) ratio (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.
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 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 .
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.
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.
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 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.
Regional loan centers are closed to the public, but you can contact the Department of Veterans Affairs for West Virginia at [email protected].
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, visit this USDA site .
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. West Virginians can reach the regional HUD office at 304-347-7000.
• Percentage of buyers nationwide who are first-time buyers: 32%
• Median age of first-time homebuyers: 35
• Median home sales price in West Virginia: $297,600
• 3% down payment: $8,928
• 20% down payment: $59,520
• Average credit score in West Virginia: 703
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.
West Virginia city and state programs can help low- to moderate-income first-time homebuyers get a leg up in the Mountain State. Other first-time buyers may be able to find opportunities among government and conventional loans on their own.
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.
Homebuying classes can be beneficial to anyone who is new to the real estate market. And for some first-time homebuyers applying for government-sponsored loans, a class is required.
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.
The West Virginia Housing Development Fund does not offer one. Ask your homebuyer education and counseling agency if a mortgage credit certificate is available in your area.
A VA-backed loan is an option in West Virginia and may require no down payment or can be paired with down payment assistance.
The West Virginia Housing Development Fund Homeownership Program generally requires a score of 640 or above. The upshot: The minimum credit score usually depends on the lender.
The median age of U.S. first-time homebuyers is 35.
Photo credit: iStock/LawrenceSawyer
*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.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
By Kenny Zhu
(Last Updated – 03/2024)
Sooners buying homes will still find relative bargains. The median sale price of an Oklahoma is $227,000, up a relatively modest 2.4% year over year as of January 2024, according to Redfin.
While those numbers may still sound intimidating, there is hope for first-time homebuyers in the form of down payment assistance and mortgage rate reductions.
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 and secure a home mortgage loan, 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: First-Time Homebuyer Guide
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.
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
Maximum debt-to-income (DTI) ratio: 45%
If you sell the home within the first nine years after purchasing it, the grant is subject to a recapture tax of up to 50% of the gain on the sale of the home, or 6.25% of the original mortgage, whichever is less.
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
Maximum DTI: 45%
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%
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%
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.
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.
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
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.
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.
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 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 .
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.
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.
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.
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 .
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.
• Percentage of buyers nationwide who are first-time buyers: 32%
• Median age of first-time homebuyers: 35
• Median home price in Oklahoma: $227,000
• Median gross rent: $937 per month
• 58.3% of Oklahoma’s housing units were owner-occupied
• Average credit score in Oklahoma: 696
Not sure how much home you can afford? Use this home affordability calculator to find out.
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 sponsors a 401(k) account and allows borrowing from the 401(k) plan, 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.
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.
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.
It’s a good idea. 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.
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.
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.
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.
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 low end of the range is 640.
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The median age of first-time buyers nationally is 35, according to the National Association of Realtors®.
Photo credit: iStock/photovs
*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.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
By Walecia Konrad
(Last Updated – 03/2024)
Whether you’re looking in one of the Washington, DC, bedroom communities, the Maryland capital of Annapolis, or close to the shores of the Chesapeake Bay, house hunting in Maryland can come with some steep price tags.
The current average home price is $401,305, up 3.5% year over year, vs. the national average of $342,941 (rising 3.1%), per Zillow.
Fortunately, a range of homebuyer assistance programs are available for first-time buyers with their hearts set on owning a piece of the Old Line State. These can help qualifying buyers with down payment, mortgage, and closing costs. There are also federal programs that can help make purchasing a property more affordable, too.
First of all, a first-time homebuyer isn’t necessarily someone who has never owned a home. Anyone who has not owned a home in the past three years is also considered a first-time homebuyer in Maryland and elsewhere.
The Maryland Mortgage Program allows honorably discharged veterans who haven’t previously used their first-time buyer exemption and buyers in targeted areas of the state to apply for some of its first-time buyer programs even if they are repeat buyers.
Homebuyer education classes are required for Maryland Mortgage Program first-time buyer programs. This can help buyers understand how much mortgage they can afford.
💡 Quick Tip: Buying a home shouldn’t be aggravating. SoFi’s online mortgage application is quick and simple, with dedicated Mortgage Loan Officers to guide you through the process.
The Maryland Mortgage Program, sponsored by the Maryland Department of Housing and Community Development, offers a couple of mortgage types and a variety of down payment assistance programs.
The state is also unusual in that it has a program for disabled homebuyers and those with student debt. Here’s more.
Maryland’s 1st Time Advantage program offers 30-year fixed-rate mortgages, which can be conventional loans or government-guaranteed FHA, USDA, or VA loans. These typically have competitive interest rates and may be paired with several second mortgage options for down payment assistance (see #5, below, for details).
Borrowers must be first-time homeowners. For buyers in some targeted areas of the state and for most veterans, the first-time homeowner requirement does not apply.
There are several versions of these 1st Time Advantage loans, some with down payment assistance, or DPA, in the form of zero-percent second mortgages. Household income limits are based on location and household size . (In targeted areas , household income may be slightly higher.) Household income is based on all sources of income for everyone 18 and older who will be living in the house. Purchase price limits also exist and depend on location.
Borrowers must have a FICO® credit score of at least 640 for government-insured loans and at least 640 to 680 for conventional loans. All borrowers must complete homebuyer education.
The Flex Loan program is similar to the 1st Time Advantage loans but is available to repeat buyers as well as first-timers. It includes down payment and closing cost assistance in the form of a 0% interest second mortgage.
If you are disabled or you are a guardian and principal caregiver for an immediate family member you live with who is disabled, Maryland’s HomeAbility program offers a 30-year fixed-rate conventional loan for 95% of the purchase price and a 0% interest second loan of up to 25% of the purchase price for a down payment or closing costs.
Payments on the second loan are deferred for the life of the first mortgage.
The income limits are lower than limits (up to 80% of the Area Median Income, or AMI) than those of other Maryland Mortgage Program loans. Applicants must document the disability.
The Maryland SmartBuy 3.0 program allows borrowers with a minimum student debt balance of $1,000 to borrow up to 15% of the home purchase price, up to $20,000, to use to pay off outstanding student debt. This is a second loan, not a second mortgage.
The full student debt of at least one of the borrowers must be paid off at the time of home purchase.
The zero-interest loan has no payments, and 20% of the loan is forgiven each year over the course of five years. If the borrower sells before that time, the remaining balance must be repaid. Borrowers must meet the same eligibility requirements as other Maryland Mortgage Program loans.
The Maryland Mortgage Program offers a variety of down payment assistance programs for both the 1st Time Advantage and Flex mortgages.
For the 1st Time Advantage program, down payment assistance includes:
1st Time Advantage 6000, a $6,000 loan for down payment and closing costs with a 0% interest rate and no payments for the life of the first mortgage. This loan is eligible for Partner Match funds. With Partner Match , if you’ve obtained other down payment assistance, say from an employer or community organization, Maryland will match that assistance, up to $2,500, through a 0% interest loan.
• 1st Time Advantage 3% Loan, a down payment assistance second mortgage equal to 3% of the first mortgage.
• 1st Time Advantage 4% Loan, a down payment assistance second mortgage equal to 4% of the first mortgage.
• 1st Time Advantage 5% Loan, a down payment assistance second mortgage equal to 5% of the loan.
Borrowers must meet the same eligibility requirements as the 1st Time Advantage mortgage.
The Flex program down payment assistance includes:
• Flex 5000, a $5,000 loan for down payment and closing costs with a 0% interest rate and no payments for the life of the first mortgage. This loan is also eligible for Partner Match funds.
• Flex 3% Loan, a down payment assistance second mortgage equal to 3% of the first mortgage.
Certain cities and areas in Maryland also have first-time homebuyer assistance programs. For example, the Maryland Mortgage Program partners with Montgomery County to offer additional down payment assistance to first-time buyers in this area near Washington, D.C. And Baltimore, Maryland’s most populous city, offers several home buying assistance programs.
Here are other programs by city or county.
Recommended: Understanding the Different Types of Mortgage Loans
In addition to the links provided above, the Maryland Department of Housing and Community Development provides details for all of its Maryland Mortgage Program loans and down payment assistance.
The agency does not lend directly but does list participating lenders . HomeAbility is only offered by lenders who have achieved gold or silver status.
Maryland SmartBuy financing is available through these approved lenders . A lender will guide and inform you as you move through the process. This can be especially important for first-time buyers, who may be unfamiliar with the mortgage lending process, to compare interest rates, fees, and other costs among lenders to find the most affordable loan.
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.
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. Some points to know:
• 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.
• 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 57% in some cases, vs. a typical 45% to 50% 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.
💡 Quick Tip: Don’t have a lot of cash on hand for a down payment? The minimum down payment for an FHA mortgage loan is as low as 3.5%.1
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 allow down payments as low as 3% for low-income borrowers. Applicants generally need a credit score of at least 620; however, costs may be lower 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 .
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.
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.
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. To learn more, email [email protected].
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 .
This program helps certain professionals, such as 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.
Here’s a snapshot of a typical Maryland home sales transaction.
• Median home value: $401,305
• 3% down payment: $12,039.15
• 20% down payment: $80,261
• Average credit score (vs. 714 nationwide): 698
Recommended: The SoFi Guide to First-Time Home Buying
Along with 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 or even 25 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.
• 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.
Maryland has several options that can help prospective homebuyers with their down payment, mortgage and closing costs. Typically, borrowers must meet income and other qualifications to access funding. Those who don’t qualify for Maryland’s housing programs may find financing via government-insured or conventional loans.
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.
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. What’s more, first-time homebuyer classes are required for some government-sponsored loan programs.
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.
Maryland previously offered mortgage credit certificates but has suspended the program. The website says the state will continue to reissue credit certificates for refinanced mortgages with approved lenders.
Veterans Affairs loans are part of the Maryland Mortgage Program, and honorably discharged veterans can likely take advantage of first-time buyer loans. (Some who are not first-time buyers may benefit, too.) Maryland veterans may also may find options in the federal VA loan programs.
Programs administered by the Maryland Mortgage program require a credit score of 640 or above for government-insured loans and a minimum score of 640 to 680 for conventional loans, depending on the lender. There are other private, state, and federal loan programs that borrowers with lower scores may be able to access.
There seems to be little data about first-time homebuyers in Maryland, but the average age nationally is 35.
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*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.
†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.
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.
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