Nationwide first-time homebuyer programs
When assessing your application for a “conventional” mortgage, lenders in the private market will usually expect to see a credit score of at least 620 and a down payment of at least 5% of the overall purchase price.
More: Use these savings accounts to build up your down payment.
If you’re coming up a little short in either respect — as many first-time buyers do — you should look into one of the following nonconventional mortgages, which you can source through the federal government.
In 1934, the Federal Housing Administration created FHA loans to encourage Americans to buy homes. At the time, about 60% of Americans rented instead of buying.
FHA lenders will grant you a loan with a credit score as low as 580 and a minimum down payment of just 3.5%, making these loans accessible to more Americans. But depending on how much money you put down, you will face long-lasting fees to cover mortgage insurance. Try putting down 10% if you can, and 20% is even better.
The FHA's Loan Requirements Explained.
A walkthrough of how to meet the FHA's requirements.See Guide
VA loans were created toward the end of the Second World War to help veterans buy homes of their own. An act passed by Congress in 1944 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.
To qualify for one of these loans, you must be an active service member, veteran or a surviving military spouse. You won’t have any down payment or mortgage insurance obligations, but you will have to pay a sizable funding fee.
USDA loans, which are guaranteed by the United States Department of Agriculture, also don’t require down payments or mortgage insurance. These loans are targeted to lower-income rural and suburban Americans.
Borrowers will find they’re charged an upfront 1% guarantee fee and an annual 0.35% fee. But if you do the math, the sum of those fees tends to be less in the long run than the mortgage insurance associated with other types of loans.
That said, you may make too much money to qualify for a USDA loan. 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 steeper-than-average cost of living.
You can find your region’s limit on the USDA’s website.
Who qualifies for Delaware’s first-time homebuyer programs?
DSHA’s basic eligibility requirements for its programs include:
- A household income at or below the following limits: $115,920 for one to two people and $144,900 for three or more in New Castle; or $98,280 for one to two people and $122,850 for three or more in Kent and Sussex.
- A minimum credit score of 620. Applicants with credit scores of 659 or below must also participate in housing counseling.
- A maximum debt-to-income ratio (DTI) of 45% for all borrowers with a FICO score of less than 699. However, there’s no maximum DTI ratio for FICO scores greater than 699.
- A maximum loan amount of $417,000.
More: Get a free credit score and credit monitoring from Credit Sesame.
First-time homebuyer programs in Delaware in 2021
DSHA offers qualified buyers 30-year fixed-rate mortgage loans, with interest rates at or below the standard market rate. The loans work through the standard mortgage programs, including conventional, VA, FHA and USDA mortgages.
Both first-time homebuyers and repeat buyers can qualify for these loans through a DSHA approved lender.
DSHA Preferred Plus loan
DSHA also offers help with down payment and closing costs.
All applicants using a DSHA loan can apply for Preferred Plus assistance, which provides a no-interest second mortgage loan of 2% to 5% of the overall purchase price. You can use this second loan for your down payment or closing costs.
The Preferred Plus amount must be repaid upon the sale, transfer or refinance of the home, or when it is no longer your primary residence.
Delaware first-time homebuyer tax credit
When you buy your first home in the state of Delaware, you may also qualify for a special tax break.
You get to claim 35% of the interest you pay on your mortgage as a federal tax credit, reducing what you owe on your federal taxes by up to $2,000 a year.
The credit can be used along with CHFA’s down payment and closing cost assistance program; you’ll just need to apply for the credit through your mortgage lender.
The Best Lenders for First-Time HomebuyersClick Here
Now that you know all your options, you may be asking yourself: “What next?”
A great first move would be to take a look at your credit score and see how you measure up to your ideal loan’s requirements. You can get a free score through the site Credit Sesame.
Was your score disappointing? That’s OK; you have plenty of options. An organization like Self credit repair can help you bring your score up.
When you’re in good shape, don’t forget to gather the important documents you’ll need to prove you’ve got money in the bank and money floating in.
Then you can finally think about getting pre-approved for a mortgage and start shopping for your new digs.
Support for new homebuyers in other states
|Arizona Department of Housing (ADOH)||Read More|
|Arkansas Development Finance Authority (ADFA)||Read More|
|California Housing Finance Agency (CalHFA)||Read More|
|Colorado Housing and Finance Agency (CHFA)||Read More|
|Connecticut Housing Finance Authority (CHFA)||Read More|
|Delaware State Housing Authority (DSHA)||Read More|
|Florida Housing Finance Corp. (Florida Housing)||Read More|
|Georgia Dream||Read More|
|Hawaii Housing and Finance Development Corporation (HHFDC)||Read More|
|Idaho Housing and Finance Association||Read More|
|Illinois Housing Development Authority (IHDA)||Read More|
|Indiana Housing and Community Development Authority (IHCDA)||Read More|
|Iowa Finance Authority (IFA)||Read More|
|Kansas Housing Resources Corporation||Read More|
|Kentucky Housing Corporation (KHC)||Read More|
|Louisiana Housing Corporation (LHC)||Read More|
|MassHousing (Massachusetts)||Read More|
|Michigan State Housing Development Authority (MSHDA)||Read More|
|Minnesota Housing||Read More|
|Missouri Housing Development Commission (MHDC)||Read More|
|Montana Board of Housing (MBOH)||Read More|
|Nebraska Investment Finance Authority (NIFA)||Read More|
|Nevada Housing Division||Read More|
|New Mexico Mortgage Finance Authority (MFA)||Read More|
|State of New York Mortgage Agency (SONYMA)||Read More|
|North Carolina Housing Finance Agency (NCHFA)||Read More|
|Ohio Housing Finance Agency (OHFA)||Read More|
|Oklahoma Housing Finance Agency (OHFA)||Read More|
|Oregon Housing and Community Services (OHCS)||Read More|
|Pennsylvania Housing Finance Agency (PHFA)||Read More|
|South Dakota Housing Development Authority (SDHDA)||Read More|
|Tennessee Housing Development Authority (THDA)||Read More|
|Texas Department of Housing and Community Affairs (TDHCA)||Read More|
|Utah Housing Corp||Read More|
|Virginia Housing||Read More|
|Washington State Housing Finance Commission (WSHFC)||Read More|
|Wisconsin Housing and Economic Development Authority (WHEDA)||Read More|
|Wyoming Community Development Authority (WCDA)||Read More|
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