First-Time Homebuyer Programs in Idaho

First-time homebuyer programs in Idaho

Idaho Housing offers unique loan products that include conventional loans, USDA loans, FHA loans and VA loans. The association boasts that it offers the lowest financing rates in the state.

Working with a participating mortgage lender, you can take advantage of Idaho Housing’s low rates and first-time homebuyer incentives. All the rates for Idaho Housing’s loan programs can be found on its website.

Fannie Mae HFA Preferred and Freddie Mac HFA Advantage

Through these programs, both first-time and repeat homebuyers can qualify for a mortgage with a down payment as small as 3%. Whether you’ll have to pay mortgage insurance as well depends on your household income.

You can also use Idaho’s Forgivable Loan and Second Mortgage programs with this loan if you’re a first-time homebuyer, but you will be required to attend homebuyer education classes. Depending on the county you live in, you may also be eligible for a Mortgage Credit Certificate.

First Loan program

This Idaho Housing program can be used with an FHA, USDA or VA loan granted from one of its participating lenders. It gives you access to special interest rates and qualifies you for Idaho Housing’s down payment and closing cost assistance programs.

To qualify, you’ll need to meet the income and sales price limits and also participate in the First Home! homebuyer education program.

More: How much house can I afford calculator

Second Mortgage for Down Payment/Closing Costs

This program offers a 10-year, 5% interest loan to help you cover the upfront costs of buying a home. The amount you’ll receive is equal to either 2.5% or 3.5% of the purchase price.

To qualify, your household income cannot exceed $110,000. You don’t have to use the First Loan program to qualify for a Second Mortgage from Idaho Housing, but if you don’t, you’ll need a credit score of at least 680. Paired with the First Loan program, that drops to 640.

You’ll also have to take Idaho Housing’s Finally Home! education program and contribute at least 0.5% of the home’s purchase price from your own funds.

Forgivable Loan for Down Payment/Closing Costs

If the Second Mortgage isn’t enough, Idaho Housing also offers down payment and closing cost assistance in the form of a 0% interest forgivable loan.

Successful applicants will receive up to 3.5% of the purchase price of their home. You won’t have to pay any interest, and after seven years the loan may be forgiven entirely.

As with the Second Mortgage program, borrowers are required to take homebuyer education classes and contribute at least 0.5% of the home’s purchase price from their own funds.

Homebuyer Tax Credit

A Mortgage Credit Certificate (MCC) issued by Idaho Housing allows a homebuyer to claim a federal tax credit for 35% of the mortgage interest they pay, up to $2,000 a year.

The MCC is non-refundable, so a homebuyer must actually owe money at tax time to take advantage of it. Plus, the MCC cannot be used in conjunction with the First Loan program.

This is a program exclusively for first-time homebuyers, which includes anyone who has not owned a home in the last three years. You’ll also have to fall within the income and home price limits. You can confirm your eligibility for the MCC through your mortgage lender. They’ll also help you fill out the application, which will cost you $300.

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Who qualifies for first-time homebuyer programs in Idaho?

The Idaho Housing and Finance Association focuses its efforts on the communities that need the most help.

To qualify, you’ll need to fall below certain income limits and your would-be home will need to fall below certain price limits. You’ll also need a minimum credit score of 620 for most of the programs, but a few require an even higher score.

More: Get a free credit score and credit monitoring from Credit Sesame.

Nationwide first-time homebuyer programs

The most common way to buy a home is to go through the private market and get a “conventional” mortgage.

The barrier to entry can be pretty high, though. You’ll usually need a credit score of 620 and a 5% down payment to get a lender on board.

More: Build your down payment faster by checking out these savings accounts.

Many first-time buyers will have an easier time using one of these nonconventional mortgages offered by the feds.

FHA loans

The Federal Housing Administration introduced FHA loans in the mid-1930s to help more Americans buy homes. At the time, more than half the population rented. The economy was still bouncing back from the Great Depression, and homeownership was out of reach for many.

FHA loans have more lenient requirements; you can skate by with a credit score of 580 and a down payment of just 3.5%. That said, a bigger down payment can help you avoid paying for mortgage insurance and let you in the door with a credit score as low as 500.

VA loans

These loans, which are guaranteed by the U.S. Department of Veterans Affairs (VA), were introduced back in 1944. Congress passed an act to grant more benefits to veterans, who had been asking for help accessing affordable homes.

These loans are strictly reserved for active service members, veterans or surviving military spouses. You’ll have to pay a sizable funding fee, but you’re not required to make a down payment or pay mortgage insurance.

USDA loans

These loans are guaranteed by the United States Department of Agriculture for lower-income rural and suburban Americans. As with VA loans, USDA loans don’t require down payments or mortgage insurance.

Instead, you’ll have to pay an upfront 1% guarantee fee and an annual 0.35% fee based off of your total loan amount. For most borrowers, those fees are still less expensive than the mortgage insurance costs associated with other types of mortgages.

Most people won’t qualify for USDA loans, though. They have strict income limits to ensure the assistance is directed only to lower-income households.

The current income limits in most parts of the country are $86,850 for one- to four-member households and $114,650 for five- to eight-member households, but the limits may be higher if you live in an area with a higher cost of living. You can find your region’s threshold on the USDA’s website.

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Next steps

Now that you know all about the national and state programs, you can start getting ready to qualify and actually buy a home.

First, you’ll want to ensure you meet the credit score requirements for loans and support. You can get a free look at your credit score through the site Credit Sesame. If your score isn’t going to cut it, you might look into a service like Self credit repair to improve your eligibility.

Next? Paperwork. Make sure you have all the documents you need to prove that you have cash on hand and money flowing in from a steady job.

After that, try to get pre-approved for a mortgage so you can get out there and finally start looking at houses.