First-time and low-income home buyers may look at the 20% down payment requirement for traditional mortgages and think that they’ll never be able to own a home. And that’s just the first hurdle in home buying; you also need money to pay closing costs and movers.
After you move in, budget for a mortgage could be more than what you previously paid in rent. Utilities and home repairs will also send monthly expenses higher. All of these hurdles are even higher to clear for low-income home buyers.
Luckily for low-income buyers in Idaho, there are many helpful programs, grants, and mortgage options to help you buy a home. If you’re a low-income home buyer in Idaho, talk to a local real estate agent about programs in your area.
Best Loans & Grants for Low-Income Home Buyers in Idaho
The state of Idaho offers state-specific programs to low-income home buyers through the Idaho Housing and Finance Association. Median home values in Idaho are $263,700, but median household income is just $52,225. A 20% down payment is roughly the amount of one year’s income.
Loans through Idaho Housing offer extremely low rates of just 3.75%. Borrowers with income up to $90,000 a year can qualify. Down payment assistance is available in the form of a second mortgage up to 3.5% of the home’s sale price, and you only have to contribute up to 0.5% of the sales price yourself.
This means that you could combine this program with an FHA loan discussed below and only have to put down 0.5% on your new home. Your credit score must be above 680, or 640 if you’re combing the second mortgage with a first loan also through Idaho Housing.
Another program for down payment assistance offered by Idaho Housing is a forgivable grant with a seven-year term. The government places a lien on your property, but the grant will be forgiven if you still own the home at year seven.
Best Federal Mortgage Options for Low-Income Buyers
Help through the Federal government is available to low-income buyers in Idaho through the Federal Housing Administration or FHA. Loans aren’t granted directly from the government, however, you borrow money from a lender who’s been approved to lend through the FHA program. Lenders such as traditional banks and credit unions will lend to low-income and less credit-worthy borrowers through the FHA loan program because the government guarantees a portion of the loan’s principal.
The low down payment requirements of FHA loans is a big help to low-income borrowers. Low-income borrowers with credit scores above 580, only have to put 3.5% down. If their score is lower but still between 500-579 the down payment requirement rises to 10%, which is still half of that required by traditional lenders. With a 3.5% or 10% down payment, you’ll have to pay for private mortgage insurance, however.
Closing costs of 2-3% can also present a financial barrier to homeownership for low-income borrowers in Idaho. FHA loans roll the closing costs into the loan’s total cost, which means that you don’t have to write a check for several thousand dollars at closing. If you qualify for an FHA loan in your state it makes the dream of homeownership a reality.
Best Private Lender Programs in Idaho for Low-Income Home Buyers
Technically, Fannie Mae and Freddie Mac are private lenders who offer first-time home buyer loans to help low-income buyers, but they are government sponsored. The biggest way that they help low-income buyers is also through lower down payment requirements.
Home Ready, Fannie Mae’s program, requires just a 3% down payment on the home you’re buying. To ensure that those who need it the most are receiving the help, there are income restrictions. Borrowers need a credit score above 620 to qualify for Home Ready. One of the program’s nicer perks is that once you’ve built up 20% equity in your home, the private mortgage insurance you’ve been paying can be canceled.
Freddie Mac’s product, HomeOne Mortgage, is similar to Home Ready in that it only requires the same 3% down payment. Freddie Mac doesn’t put any geographic or income restrictions on HomeOne mortgages, but one downside of their product is that the mortgage insurance isn’t cancellable.
Fannie Mae and Freddie Mac work with low-income and first-time home buyers on a daily basis and can answer all your questions.
Home Buyer Rebate in Idaho
Part of a real estate agent’s job is to help you identify financing options and help you evaluate them. An agent can give guidance when choosing a lender and mortgage type. They will have worked with all the major banks in your area and can recommend where to go.
Another part of their job is to uncover cost savings for you, their client. They do this by tapping into their expertise with timing the market, evaluating properties, and negotiating. Clever agents offer home buyer’s rebates, in which a portion of their commission goes back to the buyer.
To save you even more money, Clever has a buyer rebate program. Through this program, if you buy a home for more than $150k (in a qualifying state), you qualify for a $1,000 rebate to cover your closing costs.
If you want to learn more about home buying in Idaho, reach out to Clever today. We’ll connect you with an experienced, local real estate agent to answer all your questions.