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Mortgages in Iowa

The Iowa Finance Authority offers homebuyer programs targeted to lower-income households. The income limit to qualify for assistance varies by county and program. There’s also a home purchase price limit that ranges from $294,000 up to $360,000 in targeted areas. The IFA has an eligibility checker where you can confirm if you meet your region’s specific limits.

Other requirements include:

• You must be a first-time homebuyer, or not have owned property in the last three years. The only exceptions are for military members or veterans (not dishonorably discharged) who have not already used the IFA’s programs, and for homebuyers in targeted areas.
• You must plan to occupy the home as your primary residence within 60 days of closing.
• You must have a credit score of at least 640.
• Your debt-to-income (DTI) ratio must be no higher than 45%.
• You must complete homebuyer education if seeking a conventional mortgage.

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

FirstHome Program

The FirstHome Program connects first-time homebuyers with affordable mortgages and approved local lenders. With FirstHome, interest rates are typically lower than market rates, and you’ll face fewer fees.

For this program, the household income limit ranges from $79,700 to $101,200, and the purchase price limit is generally $294,000. But it could go up to $360,000 in targeted areas.

You also can request a free Iowa Title Guaranty Owner’s Certificate when you close. This certificate ensures that if a title issue arises, the Iowa Title Guaranty will step in to assume attorney fees, costs and expenses associated with defending the title to your home. While title issues aren’t common in Iowa, the certificate costs nothing and will protect you if something comes up.

FirstHome Plus Program

IFA also offers down payment and closing cost assistance. With FirstHome, qualified applicants can apply for either a down payment assistance grant or a second loan.

With the grant, you’re entitled to $2,500 to help with your down payment and closing costs. A loan would provide up to 5% of your home’s purchase price, up to a maximum of $5,000. You won’t face a monthly payment on your loan, but will be asked to pay it back when you sell the house, refinance or pay off your mortgage.

Homes for Iowans

This affordable loan program is for both first-time and repeat homebuyers in Iowa. The loans have fewer mortgage fees, and your interest rate isn’t influenced by your credit score.

For this program, the household income limit is $141,680 and the purchase price limit is $360,000.

Borrowers using the Homes for Iowans program also are entitled to request a free Iowa Title Guaranty Owner’s Certificate.

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

Homes for Iowans Plus Program

You can combine a Homes for Iowans mortgage with a down payment assistance grant or loan. With the grant, you’ll receive up to $2,500 to help with your down payment and closing costs. The loan, which you won’t have to repay until you sell, refinance or pay off your first mortgage, will provide you with either $5,000 or 5% of your purchase price.

The Homes for Iowans down payment assistance can only be paired with the Homes for Iowans mortgage program — it won’t work with the FirstHome program, and vice versa.

Military Homeownership Assistance Program

This $5,000 grant program is designed for military service members and veterans to cover down payment and closing costs on qualifying homes. The funds can be used in conjunction with either the FirstHome or Homes for Iowans program, but the money is limited by funding availability.

To be eligible, you must:

• Meet the Iowa Finance Authority’s military service history requirements.
• Have received approval before closing on your home.
• Work with an IFA-approved lender.
• Be buying an eligible home in Iowa that you plan to occupy as your primary residence within 60 days of closing.

Mortgage Credit Certificate Program

Iowa’s Mortgage Credit Certificate Program (MCC) allows homebuyers to save up to $2,000 every year on their federal taxes for the life of their mortgage loan. Every year, you’re granted a direct credit on your federal taxes of 50% of the annual interest you pay on your mortgage. You can work with your loan officer to apply for the program and determine how much you’ll qualify for through the MCC program.