First-Time Homebuyer Programs in Georgia

First-time homebuyer programs in Georgia in 2021

Georgia Dream loans are 30-year mortgages with a fixed interest rate set by the DCA.

Participating mortgage lenders will give credit approval for FHA, USDA, VA or conventional loans. Once the lender has received your application and thinks your credit looks good, the information is forwarded to DCA for review and funding approval.

The Georgia Dream program also offers 0% interest loans you can use for your down payment and closing costs. The loans have to be paid back when the home is sold, refinanced or is no longer your primary residence, but if you want to pay it back early, there’s no penalty.

The three different assistance options are designed to meet the unique needs of various Georgians:

• Georgia STANDARD is available to all eligible prospective homebuyers. You can apply for a maximum of $5,000.
• Georgia Protectors, Educators and Nurses (PEN) grants military personnel, police, fire, EMS, teachers and nurses loans of up to $7,500.
• Georgia CHOICE allows households with a member who is living with a disability to apply for up to $7,500 in assistance.

More: Estimate monthly instalments with a mortgage income calculator

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Who qualifies for first-time homebuyer programs in Georgia?

The Georgia Dream program offers a number of down payment assistance options for low- to moderate-income residents.

The program is available to first-time homebuyers, individuals who haven’t owned a home in the last three years and residents buying a home in certain areas of Georgia. (If you’re not sure whether the region you live in qualifies for assistance, ask a participating lender.)

You’ll also have to fall below certain limits on income and purchase price, which vary depending on the region you want to live in.

For households of one to two individuals, your income will have to fall below either $72,000 or $84,000, depending on the county. For households of three or more, it’s either $83,000 or $96,000.

The purchase price will either top out at $200,000 or $250,000.

DCA also requires you to take some type of homeownership class or counseling to qualify for assistance. You must either:

• Attend and complete a homebuyer education workshop;
• Take individual counseling sessions; or
• Complete an online homebuyer education course through E-Home America.

You can find a list of approved housing counseling agencies on the Georgia Dream website.

Finally, you’ll have to meet certain credit requirements and have liquid assets of no more than $20,000 or 20% of the sales price (whichever is greater).

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

Nationwide first-time homebuyer programs

To get a “conventional” loan — that is, one sourced directly through the private market — you’ll often need a credit score of at least 620 and a down payment of at least 5% of the purchase price.

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

That’s tough enough for first-time buyers, but if your down payment falls under 20%, you’ll also have to pay for pricey mortgage insurance.

Many Americans entering the real estate market for the first time will find it easier to use one of these nonconventional mortgages offered by the federal government.

FHA loans

In 1934, following the Great Depression, the Federal Housing Administration created FHA loans to help more Americans become homeowners. At the time, the U.S. was a country of mostly renters.

Securing an FHA loan is less difficult than a conventional mortgage. Your credit score typically only has to be 580, and your down payment can be as low as 3.5% of the purchase price. But you may still be expected to pay additional fees for mortgage insurance depending on how much money you put down.

VA loans

Toward the end of the Second World War, Congress passed an act to increase benefits for its many veterans. That act made it possible for the U.S. Department of Veterans Affairs (VA) to guarantee or insure home, farm and business loans made to veterans by lending institutions.

These loans are available to active service members, veterans or surviving military spouses. VA loans don’t require down payments or mortgage insurance, though they do have a significant funding fee.

USDA loans

USDA loans are guaranteed by the United States Department of Agriculture to help lower-income rural and suburban Americans buy a home. Like VA loans, they also don’t require down payments or mortgage insurance.

When you take out one of these loans, you will face an upfront 1% guarantee fee and an annual 0.35% fee. However, these fees usually end up costing less in the long run than the mortgage insurance costs associated with other types of loans.

Sounds enticing, but remember that USDA loans are limited to lower-income Americans. 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 high cost of living. You can find your region’s limit on the USDA’s website.

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Next steps

Now you have all the information, but it might not be clear what you should do first.

Ideally, before you start the home loan process, you’ll have a good idea of how much you can afford and how your credit score stands.

Don’t know your score? You can get a free look through the site Credit Sesame. If you discover your credit’s not doing so well, you might want to use the services of a credit repair organisation like Self to bring your score up.

Once you’re in a better position, you’ll want to gather all of your critical documents so you can show you have some cash on hand and money flowing in.

Then you can finally go ahead and get pre-approved for a mortgage, check out some listings and start making your Georgia Dream come true.