First-Time Home Buyer Guide in Georgia

Alex Long

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Alex Long

March 15th, 2022
Updated March 15th, 2022

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First-time buyer requirements | Home buyer programs | Down payment and closing cost assistance | Mortgage assistance | Home buying process | FAQs

Georgia offers a number of programs to first-time home buyers to make owning a home more attainable. These state-supported programs are designed to:

  • Ease the financial burdens of closing costs
  • Ease the financial burdens of a down payment
  • Offer mortgage assistance

The benefits of being a first-time buyer include assistance with down payments and closing costs and potentially lower lending requirements (like lower minimum credit score or income requirements).

To receive a loan through the Georgia Department of Community Affairs (DCA), such as a Georgia Dream loan, borrowers must complete free homeowner education.

🏡 Housing market in Georgia

  • It's a seller's market. Buyer demand exceeds how many homes are listed right now. Most homes are going off market quickly.

  • Property values are increasing. During 2022, home values in Georgia will grow by 7.6%.

  • Mortgage rates are low but rising. In Georgia, mortgage rates average 3.36% for a 15-year mortgage and 4.39% for a 30-year mortgage.

» READ: 8 Steps to Buying a House in Georgia

What are first-time home buyer requirements in Georgia?

First-time home buyer defined | Loan requirements | Financial assets | Residency

To be a qualified first-time buyer in Georgia, you must either:

  • Not have owned a home in the past three years
  • Be purchasing a home in areas targeted for development

Meeting either of the above criteria is required to qualify for a Georgia Dream loan.

» SEE: Target areas for Georgia Dream loans

Tools lenders use to evaluate home buyers

Lenders use a credit score to determine a borrower's trustworthiness.

» READ: What Credit Score Is Needed to Buy a House?

Lenders evaluate a borrower's debt-to-income ratio to prevent the borrower from taking on too much debt and defaulting on their loans. Typically, lenders want your DTI to be 36–43% of your gross income.

To calculate your DTI, add all of your recurring monthly debt payments, plus your estimated mortgage payment, and divide it by your gross monthly income (before taxes).

» READ: How to Find High DTI Mortgage Lenders

Lenders use a loan-to-value ratio to ensure they provide ONLY the absolutely necessary amount of money to a borrower.

To determine your LTV, lenders divide your home loan amount by your property's value.

An LTV of more than 80% is considered risky, since it means the lender will lend more money to their customers. However, that doesn’t mean a lender won't offer a loan to a borrower with a high LTV.

Lenders use private mortgage insurance to protect their investment in case a borrower defaults on their loan. PMI usually equals 0.3–1.15% of the loan amount.

Lenders typically require PMI on conventional mortgages where the borrower's down payment is smaller than 20%.

Lenders will cancel PMI automatically once a mortgage's LTV reaches 78%.

» READ: How Much Will My Mortgage Payment Be?

Lenders use a price-to-income ratio to calculate housing affordability.

To calculate PTI, lenders divide median home prices by median household income.

If the PTI of a location is over 2.6, it usually means home prices exceed what people can afford based on the local median household income.


Most popular loan types have pretty standardized qualification requirements across lenders.

Loan requirements

Loan type
Minimum down payment
Credit score
Debt-to-income ratio (DTI)
Best for…
Conventional fixed-rate loans
20% or
3% + PMI
620+
Average credit buyers who want a consistent loan payment
Georgia Dream Program
None
640
Varies by lender
First-time buyers with fair or good credit but relatively low income and assets
Federal Housing Administration (FHA)
3.5%
10%
580+
500–579
43%
First-time buyers who may have a lower credit score or want smaller down payments
U.S. Department of Agriculture (USDA)
None
Varies by lender
41%
Low- or moderate-income borrowers located in an eligible rural area
U.S. Department of Veterans Affairs (VA)
None
580+
41%
Veterans and active duty service members

Get Pre-approved Today!

Get matched with a lender who can tell you how much house you can afford. To get started, where do you plan on buying?

Financial assets

Lenders will also consider the following when evaluating loan applications:

  • Work history (such as how long you've worked at your current job)
  • Income level
  • Total liquid assets (cash on hand)

For conventional loans, having more assets means less risk for the lender, which increases your chances of being approved for a loan.

Conversely, you must have NO MORE than $20,000 or 20% of the property sale price (whichever is greater) to qualify for a Georgia Dream loan. These loans are designed to help borrowers who would otherwise have difficulty being approved for conventional financing.

Residency

All first-time buyer programs described here apply only to primary residences — that is, homes you actually live in.

Additionally, all programs in this article require the home to be located in the state of Georgia, and city-specific programs require you to buy a home in those metro areas. For example:

  • HOME Atlanta 4.0
  • Savannah Dream Maker
  • Augusta Down Payment Assistance

What are first-time buyer programs in Georgia?

The Georgia Department of Community Affairs (DCA) and local governments offer assistance with:

  • Down payments and closing costs
  • Mortgages
  • Low income
  • People with disabilities

The DCA does NOT offer assistance with tax credits.

Down payment and closing cost assistance programs

Because down payments are often one of the hardest barriers to homeownership to overcome, Georgia offers a number of options for down payment assistance to first-time home buyers. Many of these can be combined with FHA or VA loans.

❗Most of these programs are grants, which means they do NOT need to be paid back.

Down payment and closing costs programs
Assistance amount
Repaid, grant, or forgivable?
$7,500
Repaid
$10,000
Repaid
$10,000
Repaid
3.5% of purchase price
Grant
$10,000
Forgivable after 5 years
$14,000
Forgivable after 5 years
$10,000
Forgivable after 10 years
$5,000–60,000
Repaid
$500–5,000
Forgivable after 5 years

Government programs

Georgia Dream Program includes down payment assistance up to $7,500. This zero-interest, no-monthly payment loan is due when you sell your home or refinance your first mortgage.

It requires you to contribute at least $1,000 of your own funds and doesn't apply to buyers with more than $20,000 in liquid assets or 20% of the home purchase price, whichever is greater.

Georgia Dream also has a subprogram available for buyers with disabilities.

Georgia PEN offers $10,000 toward down payment assistance for home buyers who work as public protectors, educators, and health care providers, as well as active military service members and the National Guard.

HOME Atlanta 4.0 provides 30-year, fixed-rate FHA or VA loans with a forgivable grant of 3.5% of a home's purchase price toward a down payment or closing costs.

Intown Mortgage Assistance Program provides a conventional, FHA, or VA mortgage — plus $10,000 for a down payment and closing costs. The down payment assistance is fully forgiven after you've lived in your home for 10 years.

City and county programs

Atlanta Affordable Homeownership Program offers a forgivable grant, up to $14,000 for a down payment and closing costs, to buyers who stay in their DeKalb or Fulton County homes for at least five years. Buyers can pair this grant with a conventional, FHA, or VA loan.

Augusta Down Payment Assistance offers a forgivable grant of $500–5,000 to use toward a down payment on a single-family home for buyers who plan to stay in their Augusta–Richmond homes for at least five years. See the full program requirements.

The Savannah Housing and Neighborhood Services Department offers three Dream Maker programs:

  • Dream Maker 1 gives buyers across the city of Savannah up to $5,000.
  • Dream Maker 2 gives buyers in Community Development Block Grant (CDBG) neighborhoods up to $7,500.
  • Dream Maker 3 gives buyers in Savannah Gardens up to $60,000, in certain redevelopment areas up to $30,000, and in CDBG neighborhoods up to $20,000.

Each program includes no-interest loans deferred for 30 years (or until you move or sell) and requires buyers to take a course and contribute a minimum of $1,000 to the purchase.

Vine City Renaissance Initiative offers a forgivable grant, up to $10,000, to buyers who stay in their Vine City homes for at least five years.

Mortgage assistance programs

Georgia has a robust offering of local and statewide mortgage-assistance programs to encourage homeownership among individual families and their communities.

Georgia does NOT offer a mortgage tax credit certificate (MCC).

Government programs

Georgia Dream Homeownership Program connects first-time home buyers with approved conventional, FHA, VA, or USDA lenders to provide 30-year, fixed-rate loans and is intended to help buyers with lower incomes or liquid assets.

Buyers must:

  • Have a 640 minimum credit score; a score of at least 700 might allow for a higher DTI
  • Be purchasing a single-family home, condominium, or townhome — no mobile homes
  • Contribute at least $1,000 out of pocket
  • Have no more than $20,000 or 20% of the home's purchase price (whichever is greater)
  • Complete a home-buyer education workshop or individual housing counseling sessions

Additionally, you must meet the county income limits. In the Atlanta metro area, for example, the limits are $84,000 for a two-person household and $96,000 for a three-person or larger household. In other areas, the limits could be $72,000 for a two-person household and $83,000 for a three-person or larger household.

Application requirements vary if you apply for federal or conventional loans outside of the Georgia Dream Program. See loan types.

Through Good Neighbor Next Door, law enforcement officers, primary and secondary school teachers, firefighters, and emergency medical technicians can receive a 50% discount on their home if they:

  • Purchase a home in an area targeted for revitalization
  • Live in the home for three years

Good Neighbor Next Door exclusively lists homes in revitalization areas. However, you only have seven days to view and submit an offer on an eligible single-family home. If there are multiple offers, the buyer is selected by lottery.

What assistance is available for first-time home buyers in Georgia with low income?

The following programs are designed to assist low-income households, particularly in Atlanta.

Program (location)
Maximum income
Assistance available
Maximum purchase price
Forgivable loan term or grant
Georgia Dream (Atlanta only)
$84,000–93,000
$7,500 or $10,000
$325,000
Repaid upon sale or refinance
Georgia Dream (outside Atlanta)
$72,000–83,000
$7,500 or $10,000
$275,000 or $325,000
Repaid upon sale or refinance
HOME Atlanta 4.0
$81,060–125,160
3.5% of home price
$358,800
Grant
Atlanta Affordable Homeownership
$46,350–71,450
$14,000
$223,000 or $238,000
Forgivable after 5 years
Intown Mortgage Assistance
$69,480–107,280
$10,000
$358,800 or $424,100
Forgivable after 10 years

Nongovernment programs

Habitat for Humanity affiliates bring homeownership to low-income families, based on household size and local incomes. In Atlanta, for example, the maximum income allowed ranges from $25,800 per year for one person to $91,080 for eight people.

To qualify, Habitat homeowners must demonstrate a need for safe, affordable housing and be active participants in the program. This can mean they:

  • Help build their own home or others
  • Take homeownership classes
  • Volunteer in a Habitat ReStore

What assistance is available for first-time home buyers in Georgia with disabilities?

In addition to offering down payment and mortgage assistance to borrowers with financial difficulties, Georgia also offers assistance to households that include a person with a disability.[1]

Georgia Choice, a subprogram of Georgia Dream, offers $10,000 in down payment assistance for persons with a disability or who live with a family member who is disabled. This loan is due when you sell your home or refinance your first mortgage.

What's the process of buying a house for the first time?

Although it may seem intimidating, home buying can actually be broken down into a simple step-by-step guide.

Step 1: Evaluate your financial situation

Determine your household income, credit score, total cash assets, and debt. All of these will be relevant information for creating a complete picture of your financial health.

Step 2: Choose the right neighborhood

To determine which neighborhood is right for you, consider your priorities and price range to locate the best options for your situation.

» FIND: Most Affordable Places to Live in Georgia

Step 3: Find a great real estate agent in Georgia

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Step 4: Get pre-approved for a mortgage

This will require compiling various kinds of information for your lender to evaluate. You'll likely need:

  • Your previous year's tax returns
  • Two recent pay stubs
  • To give the lender permission to run your credit report

Get Pre-approved Today!

Get matched with a lender who can tell you how much house you can afford. To get started, where do you plan on buying?

Step 5: Start house hunting in Georgia

Once you're approved for a loan, you can keep an eye on available properties in your desired neighborhood. Have multiple options in mind so you don't overcommit to one too soon.

» LEARN: 30 Mistakes First-time Buyers Make

Step 6: Make offers

Once you find a home you want, your agent will help you put together a formal offer.

You'll need an earnest money deposit as well as any stipulations you wish to make.

» LEARN: What is earnest money?

Step 7: Inspections and appraisals

Most first-time buyers should get a home inspection and appraisal done to limit risk. These will help you to evaluate any issues the property may have as well as determine fair market value.

Step 8: Final walkthrough and closing

Once your offer has been accepted and a closing date has been set, you’ll usually have one final chance to walk through and see the property before signing the contract and formally purchasing the property. And then you’ll be a homeowner!

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FAQs for first-time home buyers in Georgia?

The best program for you will depend on your individual circumstances.

Applying for a Georgia Dream Loan and completing the required home-buyer education is a good way to determine which option is best for you, but it largely depends on how much money you make, how much you want to spend, and what your qualifications are.

Different loan types and lenders have different standards. For example, you’ll need a credit score of at least 640 to qualify for a Georgia Dream loan. Some FHA lenders will go as low as 580 with a 3% down payment or as low as 500 with a 10% down payment.

Typically, closing costs range from 3–6% of a property's sale price. In Georgia, the median home price is $306,113, which would amount to $9,183-18,367 in closing costs. Buyers can sometimes negotiate for sellers to cover these closing costs, but this is more difficult in a seller’s market.

First-time buyer programs can make it easier for someone to buy a house. This usually involves down payment assistance, closing cost assistance, softer qualification requirements, and free home-buyer education.

Sometimes, various types of assistance can be combined to create an economically viable situation for first-time buyers.

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ARTICLE SOURCES
[1]

ADA.gov. "Americans with Disabilities Act." Accessed Mar 9, 2022. Updated Feb 24, 2020.

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