Why Wisconsin Home Buyers Should Know About WHEDA Loans

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By Clever Real Estate Updated December 29, 2022


Wisconsin on map, WHEDA loan

Thinking about buying a home in Wisconsin? There's a program you should know about. It's called the WHEDA loan.

Wisconsin Housing and Economic Development Authority Loans

Don't let lower credit scores or a low income deter you from buying the house of your dreams! The Wisconsin Housing and Economic Development Authority (WHEDA) offers loan programs that help home buyers with low to moderate income get a 30-year fixed-rate loan. Here's a look inside of those programs and benefits.

The Benefits of WHEDA Loans

WHEDA loans significantly lower the initial costs of buying and owning a house. Wisconsin residents who never thought they could afford a house can make their dreams come true with a WHEDA home loan. If you're looking to take out a 30-year fixed loan in Wisconsin, WHEDA is your most affordable option.

Low Down Payment

First-time home buyers only need to put down 3% of the down payment when they go to buy a home. If the 3% is too high, buyers can take out an additional loan to help with the down payment.

Typically, home buyers who pay such a small down payment have to pay for additional Private Mortgage Insurance (PMI.) This insurance promises to reimburse mortgage lenders the rest of the down payment. As you’ll soon see, buyers can take out WHEDA loans without PMI, reducing their costs even further. If you must pay Private Mortgage Insurance, don’t worry - the cost of WHEDA PMI are lower than the costs of PMI for other 30-year fixed loans on the market.

Low Interest Rates

Often, home buyers have to choose between a low down payment or low-interest rates. WHEDA loans offer both! Compared to conventional loans, WHEDA loans have some of the lowest interest rates on the market. The 30-year fixed interest rate can help you plan your finances without any surprises or dread for years to come.

Tax Advantages

WHEDA doesn’t just save you money on your interest payments—you can also pay lower taxes thanks to the WHEDA Tax Advantage.

Qualified borrowers can claim up to 40% of the mortgage interest they pay throughout the year and use it as a tax credit. Home buyers can save up to $2,000 throughout the 30-year life of the loan! It certainly feels nice to get some of your mortgage payments back in your hands after tax season.

Types of WHEDA Loans

Every home buyer is different; that’s why the WHEDA offers different loans to meet your needs. Not all buyers will qualify for all loans; talk to a mortgage lender about the best option for you and your family.

First-Time Home Buyer Advantage Loans

Buyers who have not owned real estate in the past three years get some of the best WHEDA loan options. The First-Time Home Buyer Advantage loan comes with the option of paying or not paying Private Mortgage Insurance. Either option may be the better financial choice for your situation, so talk to a mortgage lender before applying.

"Regular" WHEDA Advantage Loans

WHEDA loans are not exclusive to low-income, first-time home buyers. If you have owned property in the past three years or have a moderate income, you can still apply for a "regular" WHEDA loan with or without PMI.

Advantage Conventional HomeStyle Renovation Loan

Fancy a fixer-upper? The WHEDA offers a special loan program for buyers who want to buy and renovate a home. Choosing a home that needs renovation can lower the initial purchase price of the home and give you the opportunity to make the home truly yours.

The HomeStyle Renovation loan comes with financing options for all of the costs that come with your renovation. If you are not living in your home in order to complete the reno, the loan will help you finance the first six monthly mortgage payments. Time to get fixing!

Veterans Affordable Loan Opportunity Rate (VALOR)

Wisconsin offers an additional loan program for the brave men and women who have given their service to our country. Veterans that qualify for the VALOR program can get mortgage prices at an even lower rate than conventional WHEDA loans. And you thought these loans couldn’t get any more affordable!

Do not worry if you are a veteran who has purchased a home before; the WHEDA waives that requirement and lets you apply for the loan anyway. These loans are first come, first serve, so don’t wait to find a lender and apply for this loan.

How Wisconsin Home Buyers Can Qualify for WHEDA Loans

Not everyone can get their hands on a WHEDA loan; these are reserved for low-income, first-time home buyers. WHEDA loans are also only available for these buyers if they want to purchase an owner-occupied home (rather than renting it out on AirBNB.)

Get pre-approval after you provide proof of the following qualifications:

First-Time Home Buyer Status

WHEDA only gives out first-time home buyer loans to Wisconsin residents who have not purchased or owned a piece of real estate in the past three years. Even if you have purchased a home in the past, you can still qualify for first-time home buyer WHEDA loans if the real estate was sold or transferred over three years ago.

What does my credit score need to be to qualify for WHEDA?

In order to qualify for a WHEDA loan, you will have to have a minimum credit score of 620. Talk to a mortgage lender about financing options that can help you boost your credit score and elevate your chances of qualifying for a WHEDA loan.

Certificate of Education Course

First-time borrowers who want to apply for a WHEDA loan will have to take a homebuyer education course. The course will take you through financing options, how to buy the right house for your budget, and what you can do to ensure that your home stays yours for many years to come.

Note: The Wisconsin Housing Economic and Development Authority supports equal housing opportunities for all people. They do not control the content on this website and websites linked through this browser. Outside sources provide this content; WHEDA is not responsible for the content.

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