First-Time Homebuyer Programs in Kansas

First-time homebuyer programs in Kansas in 2021

To help first-time homebuyers in Kansas, the Kansas Housing Resources Corporation (KHRC) and the Kansas Housing Assistance Program (KHAP) offer down payment and closing cost assistance programs through their approved mortgage lenders.

First Time Homebuyer Program

KHRC’s First Time Homebuyer Program allows homebuyers to apply for a 0% interest loan for 15% or 20% of the purchase price of their home.

This is a forgivable loan: After 10 years, if the homebuyer is still in the home, the loan will be forgiven. The subsidy must be used for down payment and closing costs.

There’s no credit score requirement for this program, but you must be able to secure a mortgage with an interest rate in line with the current market through one of KHRC’s approved lenders. To get a list of qualified lenders in your area, the KHRC suggests you get in contact with its staff through its website.

Homes in Topeka, Lawrence, Wichita, Kansas City and Johnson County aren’t eligible for the First Time Homebuyer Program because those counties administer their own homeownership assistance programs.

More: Estimate monthly instalments with a mortgage income calculator

Kansas Housing Assistance Program

KHAP is a statewide program for homebuyers, offering a 30-year fixed-rate mortgage with up to a 5% grant to help with down payment and closing costs. It’s co-sponsored by Sedgwick and Shawnee counties.

To qualify, you’ll need a 640 credit score for conventional, USDA and VA loans and a score of 660 for an FHA loan. You’ll also have to fall under the income and purchase price limits.

The terms apply for the purchase of single-family homes, townhouses, condominiums and duplexes (provided one unit is owner-occupied).

If you meet those requirements, you’ll work with an approved lender to apply for assistance.

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Who qualifies for down payment assistance in Kansas?

To be eligible, applicants must be first-time homebuyers or not have owned a home during the last three years.

The programs are intended to help residents of low to moderate means, so your income will have to fall under 80% of the median household income in your area.

You’ll also have to make an investment of at least 2% of the purchase price from your own funds, but no more than 10%.

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

Nationwide first-time homebuyer programs

To get a “conventional” mortgage in the private market, you’ll often need a credit score of 620 and at least 5% of the price of the home for a down payment.

More: Use these savings accounts to build up your down payment.

Not everyone has a score that high or that much cash on hand. Luckily, the federal government has a number of nonconventional mortgage options that can help first-timers break into the market.

FHA loans

Federal Housing Administration (FHA) loans were created in 1934 to help more Americans become homeowners. At the time, fewer than half of American households actually owned their homes. Since its creation, the FHA has insured more than 46 million mortgages.

FHA loans typically have a minimum credit score of 580 and a 3.5% down payment, but if you put down more money upfront, you could qualify with a score as low as 500. Keep in mind, if your down payment is less than 10%, you’ll also have to pay a mortgage insurance premium.

VA loans

Congress passed the act that created these loans in 1944 with a goal to increase benefits to veterans. As a result, the U.S. Department of Veterans Affairs (VA) can guarantee or insure home loans made to veterans by a number of lending institutions.

VA loans are available to active service members, veterans and some surviving military spouses. Borrowers have to pay a funding fee but aren’t required to offer a down payment or pay mortgage insurance.

USDA loans

Similarly, USDA loans, which are targeted to lower-income rural and suburban Americans, don’t require down payments or private mortgage insurance. These loans are guaranteed by the United States Department of Agriculture.

Borrowers will have to pay an upfront 1% guarantee fee and an annual 0.35% fee with these loans, but that generally averages out to less than what you’d pay in mortgage insurance with another loan.

The USDA is pretty strict about who qualifies for these loans, income-wise. The current income limits in most parts of the U.S. are $86,850 for one- to four-member households and $114,650 for five- to eight-member households, but the thresholds may be higher if you live in a county with a steeper-than-average cost of living.

The USDA’s website allows you to search for the exact limits in your region.

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Next steps

Now you know what programs are out there to help you. But where do you even start?

Well, in almost every case your credit score is crucial. If you don’t know your score, a free service like Credit Sesame can help you find it.

Some of these programs have credit score requirements, but don’t despair if yours comes up short. There are some great options out there, like Self credit repair, that will help you get the score you need.

Next, collect all of your essential documents. You’ll usually need to show that you have money in the bank and a steady income.

Once you’re all set, getting pre-approved for a mortgage will give you an idea of what you can afford and the interest rates you’ll have to pay.