Who Is Considered a First-Time Homebuyer in Maine?

A first-time homebuyer in Maine or elsewhere doesn’t actually have to have never bought a home; they just must have had no ownership interest in a primary home in the past three years.

For the purposes of qualifying for a home mortgage loan, the U.S. Department of Housing and Urban Development (HUD) also includes:

•   A single parent who has only owned a home with a partner while married

•   A displaced homemaker who has only owned a home with a spouse

•   Someone who has owned a principal residence not permanently affixed to a permanent foundation

•   Someone who has only owned a property that wasn’t in compliance with state, local, or model building codes

If you’re looking for a good value in the Pine Tree State, check out this list of the most affordable places in Maine.

Recommended: First-Time Homebuyer Guide

3 Maine Programs for First-Time Homebuyers

Here are a few of the programs that offer low-interest mortgage loans or down payment and closing cost assistance to first-time homebuyers in Maine.

Active-duty military members and veterans should know that the Maine housing authority waives the first-time homebuyer requirement for them, and MaineHousing provides a 0.50% interest rate reduction on a mortgage.

1. MaineHousing: First Home Loan Program

You may be eligible for a loan that requires little or no down payment with MaineHousing’s First Loan Program, which offers an FHA, USDA, VA, or conventional 30-year fixed-rate mortgage (except a manufactured home’s age determines the loan term, from 20 to 30 years).

The minimum FICO^® credit score is 640, and maximum debt-to-income ratio, 43% (though a lower credit score and 45% DTI will be considered case by case).

Household income and purchase price limits apply.

With this program you can buy:

•   New and existing single-family homes

•   Owner-occupied two- to four-unit properties

•   Condominiums

•   Permanently attached manufactured homes built within the last 20 years

To apply, contact an approved lender .

2. MaineHousing: Advantage Down Payment Program

Need help with your down payment or closing costs? This program can provide $5,000 in cash toward those needs when paired with a First Home mortgage. To qualify, you must take a homebuyer education class and contribute at least 1% of the loan, although your contribution may be a gift. Learn more here .

3. MaineHousing: Multi-Unit Advantage

This program provides closing cost and down payment assistance per unit for a one- to four-unit property. Here’s how much you can get:

•   2 units: $8,000

•   3 units: $11,000

•   4 units: $14,000

The same eligibility criteria and income/purchase price limits as First Home apply. You must complete a landlord education course as well as a homebuyer education class, and contribute at least 1% of the loan.

An approved lender can get you started.

How to Apply to Maine Programs for First-Time Homebuyers

To apply for any of the above programs, contact a MaineHousing-approved lender. A participating lender can help determine how much home you can afford and identify any credit issues you may need to work on.

A home affordability calculator can also help you estimate what you can afford.

Recommended: The Different Types of Mortgage Loans

Federal Programs for First-Time Homebuyers

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

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

Federal Housing Administration (FHA) Loans

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

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

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

FHA loans always require mortgage insurance: a 1.75% upfront fee and annual premiums for the life of the loan, unless you make a down payment of at least 10%, which allows the removal of mortgage insurance after 11 years. For a $300,000 mortgage balance, upfront MIP would be around $5,250 and monthly MIP, at a rate of 0.55%, would be around $137. You can learn more about these loans, including FHA loans for refinance and rehab of properties, by reading up on FHA requirements, loan limits, and rates.

Freddie Mac Home Possible Mortgages

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

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

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

Fannie Mae HomeReady Mortgages

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

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

Fannie Mae Standard 97 LTV Loan

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

Department of Veterans Affairs (VA) Loans

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

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

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

Native American Veteran Direct Loans (NADLs)

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

US Department of Agriculture (USDA) Loans

No down payment is required on these loans 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 2024

•   Median home sale price in Maine: $360,200

•   3% down payment: $10,806

•   20% down payment: $72,040

•   Percentage of buyers nationwide who are first-time buyers: 32%

•   Median age of first-time homebuyers: 35

•   Average credit score (vs. average U.S. score of 714): 731

Recommended: Mortgage Prequalification vs. Preapproval

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. After reading up on how to choose a mortgage term, check out these tips on how to lower your mortgage payment:

•  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.

A home affordability calculator can help you understand how much you can afford to pay for a home.

The Takeaway

First-time homebuyers in Maine may be able to qualify for mortgages paired with down payment assistance. Other first-time buyers can shop for a mortgage that suits their needs among the wide world of home loans.

By Susan Guillory

(Last Updated – 03/2024)

Thinking about moving to North Dakota? The state has a lot going for it. In addition to tons of open space, gorgeous landscapes, and a relaxed way of life, the cost of living is lower than the U.S. average and so is the tax rate.

Home prices in the state dropped ever so slightly in the year ending February 2024 and the average home value in North Dakota is now $248,022, according to Zillow. That means there are plenty of opportunities to find your affordable dream home in North Dakota.

This home buying guide was created with the first time home buyer in North Dakota in mind. It includes both state and federal housing programs that can help with a mortgage, down payment, and closing costs.

4 North Dakota Programs for First-Time Homebuyers

There are several state programs that provide financial assistance and low-interest mortgage loans to the first time home buyer in North Dakota. Many of these programs are designed to help low- to moderate income buyers, and they may have income and purchase price limits, a required credit score, or other criteria you’ll need to meet.

The North Dakota Housing Finance Agency offers the following for first-time homebuyers:

1. NDHFA: FirstHome

The North Dakota Housing Finance Agency’s First Home program provides low-interest mortgages to low-income first-time buyers. To qualify, you must be a first time home buyer in North Dakota (you can’t have owned a principal residence in the last three years) and you must meet income and purchase price limits. You are also required to make a $500 investment and occupy the home as your primary residence, and you’ll need to take a homebuyer education class.

2. NDHFA: Down Payment and Closing Cost Assistance

NDHFA also offers assistance with down payments and closing costs. The assistance equals 3% of the first mortgage loan amount and comes as a credit toward your out-of-pocket cash requirement.

To qualify, you must meet the income limits for your family size and county. This option only applies for one- or two-unit properties, and one unit must be occupied by you. You’ll need to complete a homebuyer education course.

3. NDHFA: HomeAccess

While it’s not exclusively for the first time home buyer in North Dakota, the HomeAccess program offered by NDHFA may be worth looking at, especially if you are a single parent, a veteran, disabled, or over age 65. To qualify for affordable financing for a home, you must meet income and purchase price limits.

4. NDHFA: Start

Another option for low- to moderate-income buyers is the Start program. This program, which is not just for first-time buyers, offers affordable financing that includes down payment and closing cost assistance, up to 3% of the first mortgage. To qualify, you must be purchasing a one- or two-unit property and living in one unit.

Recommended: First-Time Homebuyer Guide

How to Apply to North Dakota Programs for First-Time Homebuyers

Carefully review the requirements for all first-time homebuyer programs in North Dakota, particularly income and purchase price limits, to see if you meet the criteria. You’ll generally need to contact a lender to participate in any given program.

Federal Programs for First-Time Homebuyers

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

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

Federal Housing Administration (FHA) Loans

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

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

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

FHA loans always require mortgage insurance: a 1.75% upfront fee and annual premiums for the life of the loan, unless you make a down payment of at least 10%, which allows the removal of mortgage insurance after 11 years. For a $300,000 mortgage balance, upfront MIP would be around $5,250 and monthly MIP, at a rate of 0.55%, would be around $137. You can learn more about these loans, including FHA loans for refinance and rehab of properties, by reading up on FHA requirements, loan limits, and rates.

Freddie Mac Home Possible Mortgages

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

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

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

Fannie Mae HomeReady Mortgages

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

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

Fannie Mae Standard 97 LTV Loan

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

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

Department of Veterans Affairs (VA) Loans

Active-duty members of the military, veterans, and eligible family members may apply for loans backed by the Department of Veterans Affairs. VA loans, 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.

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

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

Native American Veteran Direct Loans (NADLs)

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

Regional loan centers are closed to the public, but you can learn more from the North Dakota Department of Veterans Affairs.

US 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.

For more information, you can contact HUD’s office in North Dakota at (701) 239-5136.

First-Time Homebuyer Stats for 2024

•   Median home sale price in North Dakota: $248,022

•   3% down payment: $7,440

•   20% down payment: $49,604

•   Percentage of buyers nationwide who are first-time buyers: 32%

•   Median age of first-time homebuyers: 35

•   Average credit score (vs. average U.S. score of 714): 733

Recommended: Mortgage Prequalification vs. Preapproval

By Susan Guillory

(Last Updated – 03/2024)

With its breathtaking natural beauty, clean air, and miles and miles of wilderness, Alaska, known as the Last Frontier, is a nature lover’s paradise. And it’s a good place to be looking for a home: As of February 2024, home prices in Alaska were up just 0.5% over the prior year. The median selling price is $355,200, according to Redfin.

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

4 Alaska Programs for First-Time Homebuyers

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

1. AHFC: First Home Limited Loans

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

2. AHFC: First Home Loans

Unlike the First Home Limited program, First Home does not have income or purchase price limits. To qualify, you must not have not owned a home in the past three years. To apply, contact an AHFC-approved lender .

3. AHFC: Low-Income Borrowers Loans

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

4. AHFC: Affordable Housing Enhanced

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

How to Apply to Alaska Programs for First-Time Homebuyers

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

Recommended: First-Time Homebuyer Guide

Federal Programs for First-Time Homebuyers

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

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

Federal Housing Administration (FHA) Loans

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

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

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

FHA loans always require mortgage insurance: a 1.75% upfront fee and annual premiums for the life of the loan, unless you make a down payment of at least 10%, which allows the removal of mortgage insurance after 11 years. For a $300,000 mortgage balance, upfront MIP would be around $5,250 and monthly MIP, at a rate of 0.55%, would be around $137. You can learn more about these loans, including FHA loans for refinance and rehab of properties, by reading up on FHA requirements, loan limits, and rates.

Freddie Mac Home Possible Mortgages

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

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

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

Fannie Mae HomeReady Mortgages

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

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

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

Fannie Mae Standard 97 LTV Loan

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

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

Department of Veterans Affairs (VA) Loans

Active-duty members of the military, veterans, and eligible family members may apply for loans backed by the Department of Veterans Affairs. VA loans, 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 advantage of VA loans is that they do not require private mortgage insurance (PMI) for borrowers who make a down payment of less than 20%. And they have more flexible credit score requirements. In some cases, even those who have previously been in foreclosure or bankruptcy can qualify.

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

Native American Veteran Direct Loans (NADLs)

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

US Department of Agriculture (USDA) Loans

No down payment is required on these loans 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 2024

•   Median home sale price in Alaska: $355,200

•   3% down payment: $10,656

•   20% down payment: $71,040

•   Percentage of buyers nationwide who are first-time buyers: 32%

•   Median age of first-time homebuyers: 35

•   Average credit score (vs. average U.S. score of 714): 722

Recommended: Mortgage Prequalification vs. Preapproval

By Susan Guillory

(Last Updated – 03/2024)

Are you a first-time homebuyer in Connecticut? You’re looking at a tough market in the Constitution State. In February 2024, home prices in Connecticut were up 13.2% year-over-year. The median price of a Nutmeg State home is $375,300, according to Redfin. This home buying guide was crafted to help first-time homebuyers. But hey, that raises a question…

7 Connecticut Programs for First-Time Homebuyers

The Connecticut Housing Finance Authority leads the way in offering mortgages and down payment assistance to low- and moderate-income buyers.

Here are the programs.

1. Homebuyer Mortgage Program

Connecticut Housing Finance Authority mortgages with below-market interest rates can be paired with down payment assistance for those who qualify. Borrowers must be first-time homebuyers or purchasing in a targeted area. There are home price and income limits .

Borrowers must attend a free homebuyer education course, which will explain the home-buying process and mortgage basics.

2. HFA Advantage and HFA Preferred Loan Programs

This program for first-time buyers and people purchasing in a targeted area provides mortgage loans with lower monthly mortgage insurance costs. And mortgage insurance premiums end when the borrower reaches 20% equity.

You must meet sale price and income limits (see the map link above or this chart ).

3. Military, Teacher, and Police Homeownership Programs

Connecticut Housing offers benefits to active-duty military members, veterans, and surviving spouses who meet purchase price and income limits. The agency has a similar program for teachers and police officers .

Another mortgage and down payment program is for applicants who are disabled or who have a disabled member of the household.

4. Down Payment Assistance Program Loan

This very low-rate second mortgage program provides a loan of up to $15,000 at an attractive rate to help with a down payment or closing costs.

Borrowers must apply and qualify for a Connecticut Housing mortgage with a participating lender and demonstrate the ability to repay that mortgage and the second loan to qualify.

5. Time To Own: Forgivable Down Payment Assistance

This program provides 0% interest loans with no monthly payment required. Each year, 10% of the balance will be forgiven until the loan is fully forgiven in 10 years. The loan amounts are as follows:

•   Homes in high- or very high-opportunity areas : up to $50,000

•   Homes in other areas: up to $25,000

Borrowers must qualify and receive a Connecticut Housing mortgage, and must have been a resident of Connecticut for at least three years.

The Time to Own loan may be used with other down payment assistance programs.

6. Another Down Payment Assistance Program

The Housing Development Fund (HDF) offers down payment assistance to qualified first-time homebuyers (the applicant and any non-borrowing spouse must be first-time buyers).

To be eligible, you must have not had a bankruptcy in the past four years or a foreclosure in the past seven years. You must have funds available to cover at least 1% of the purchase price, pre-closing costs, and emergency reserves, and be able to demonstrate a steady work history and on-time bill payment.

HDF’s equity fund provides additional assistance, up to $20,000 at 0%, for Black, Indigenous, and Person of Color first-time homebuyers in Connecticut.

7. City Programs in Connecticut

Some cities also offer homeownership help. You might want to look into your city of choice and consult the
list compiled by the U.S. Department of Housing and Urban Development (HUD).

How to Apply to Connecticut Programs for First-Time Homebuyers

To apply for a mortgage offered by the Connecticut Housing Finance Authority, contact one or more participating lenders .

To apply for Housing Development Fund down payment assistance, create an account and upload documents.

Do you know how much you can afford to pay for a house? This home affordability calculator could help.

Federal Programs for First-Time Homebuyers

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

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

Federal Housing Administration (FHA) Loans

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

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

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

FHA loans always require mortgage insurance: a 1.75% upfront fee and annual premiums for the life of the loan, unless you make a down payment of at least 10%, which allows the removal of mortgage insurance after 11 years. For a $300,000 mortgage balance, upfront MIP would be around $5,250 and monthly MIP, at a rate of 0.55%, would be around $137. You can learn more about these loans, including FHA loans for refinance and rehab of properties, by reading up on FHA requirements, loan limits, and rates.

Freddie Mac Home Possible Mortgages

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

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

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

Fannie Mae HomeReady Mortgages

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

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

Fannie Mae Standard 97 LTV Loan

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

Department of Veterans Affairs (VA) Loans

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

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

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

Native American Veteran Direct Loans (NADLs)

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

US Department of Agriculture (USDA) Loans

No down payment is required on these loans 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. Here’s contact info for the Connecticut HUD office .

First-Time Homebuyer Stats for 2024

•   Median home sale price in Connecticut: $375,300

•   3% down payment: $11,259

•   20% down payment: $75,060

•   Percentage of buyers nationwide who are first-time buyers: 32%

•   Median age of first-time homebuyers: 35

•   Average credit score (vs. average U.S. score of 714): 726

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.

Finally, this home affordability calculator can show you how much you can afford to spend on a home.

The Takeaway

First-time homebuyers in Connecticut may be able to take advantage of attractive home loan and down payment assistance options. Those who don’t fit within the parameters can look for mortgage opportunities on their own.

By Susan Guillory

(Last Updated – 03/2024)

The Mount Rushmore State saw a 6.8% increase in home prices from February 2023 to February 2024. South Dakota may appeal to both seasoned and first-time homebuyers in part because of its low cost of living compared to other parts of the country. And that appeal may be one reason why the number of homes sold was up 4.3% year over year. The median price in South Dakota is now $311,500, according to Redfin, a real estate brokerage that tracks trends.

You’ll need to have a game plan for buying a home in South Dakota. This home buying guide will show you state and federal payment assistance for the first-time homebuyer in South Dakota.

Recommended: First Time Homebuyer Guide

5 South Dakota Housing Programs for First-Time Homebuyers

If you lack the money for a down payment or aren’t sure how you will afford a home mortgage loan, programs in the state may be able to provide assistance.

1. South Dakota Housing First-Time Homebuyer Program

The South Dakota Housing Development Authority has a first-time homebuyer program that provides low-interest, fixed-rate loans.

To qualify, you must meet household income and purchase price limits . The current price limit for first-time homebuyers is $385,000.

2. South Dakota Housing Down Payment Assistance

The agency also provides down payment and closing cost assistance in the form of a 0% interest, 30-year second mortgage, due upon the sale of the property or satisfaction of the first mortgage. Borrowers receive 3% or 5% of the purchase price in assistance.

3. Grow South Dakota Home Mortgage Lending

Grow South Dakota also offers home mortgages for new or existing homes in South Dakota. Loans are available for up to $300,000.

4. Grow South Dakota Down Payment/Closing Cost Assistance

Grow South Dakota also provides down payment and closing cost assistance in an amount from $5,000 to $10,500. This comes in the form of a no-interest deferred loan.

5. Homes Are Possible Closing Cost Assistance

Another organization that provides closing cost assistance is Homes Are Possible, Inc. in Northeast South Dakota. HAPI sells first-generation, move-in-ready homes and offers a non-interest-bearing second mortgage of $20,000 to $30,000 to help make ownership possible.

How to Apply to South Dakota Programs for First-Time Homebuyers

As you explore different types of mortgage loans and first-time homebuyer programs, make a list of qualifications and requirements. Then, when you’ve chosen the best first-time homebuyer program, you’ll be prepared to apply.

For South Dakota Housing Development Authority programs, contact one or more participating lenders .

To qualify for Grow South Dakota assistance, you will need a fully executed purchase agreement and approval letter from an approved first mortgage lender. Start your application by creating an account

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

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

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

FHA loans always require mortgage insurance: a 1.75% upfront fee and annual premiums for the life of the loan, unless you make a down payment of at least 10%, which allows the removal of mortgage insurance after 11 years. For a $300,000 mortgage balance, upfront MIP would be around $5,250 and monthly MIP, at a rate of 0.55%, would be around $137. You can learn more about these loans, including FHA loans for refinance and rehab of properties, by reading up on FHA requirements, loan limits, and rates.

Freddie Mac Home Possible Mortgages

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

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

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

Fannie Mae HomeReady Mortgages

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

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

Fannie Mae Standard 97 LTV Loan

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

Department of Veterans Affairs (VA) Loans

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

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

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

Native American Veteran Direct Loans (NADLs)

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

US Department of Agriculture (USDA) Loans

No down payment is required on these loans 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.

Reach the HUD Sioux Falls Field Office at 605-330-4223.

First-Time Homebuyer Stats for 2024

•   Median home sale price in South Dakota: $311,500

•   3% down payment: $9,345

•   20% down payment: $62,300

•   Percentage of buyers nationwide who are first-time buyers: 32%

•   Median age of first-time homebuyers: 35

•   Average credit score (vs. average U.S. score of 714): 734

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.

Finally, here’s a home affordability calculator that can help you determine how much house you might be able to afford.

The Takeaway

Income-qualified first-time homebuyers in South Dakota have options to help them pay for a home. Other first-time buyers can explore the wide world of mortgages on their own to find the right fit.