Mississippi First-Time Home Buyer Programs of 2021

NerdWallet
By NerdWallet 
Edited by Alex Richards
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Buying a home costs a lot of money upfront, and the Mississippi Home Corporation offers financial help with a down payment and closing costs in order to give first-time home buyers a boost.

The Mississippi Home Corporation defines a first-time home buyer as someone who has not owned a home in the past three years, although exceptions are sometimes made for veterans and people buying in federally designated target areas where incomes are typically low.

Buyers may also take advantage of national loan programs with low credit score or down payment requirements. Explore all the options for buying your first home in the Magnolia State.

National first-time home buyer programs

These loan programs are available in all states. They allow qualified home buyers to purchase homes with a small down payment — or even with no down payment at all. Loans that require lower down payments are important to many first-time buyers.

Conventional mortgage

Best for:

Low down payments, limited mortgage insurance premiums

What you need to know:

A conventional mortgage is a home loan that isn’t guaranteed or insured by the federal government. Conventional mortgages that conform to the requirements set forth by Fannie Mae and Freddie Mac allow down payments as low as 3% for first-time buyers or lower-income home buyers. Unlike FHA loans, conventional loans allow borrowers to eventually cancel their mortgage insurance or avoid mortgage insurance altogether if they put at least 20% down.

VA loans

Best for:

Military, low down payments

What you need to know:

The U.S. Department of Veterans Affairs helps service members, veterans and surviving spouses buy homes. VA loans are especially generous, providing competitive interest rates, often requiring no down payment or mortgage insurance. Although there is no official minimum credit score, most VA-approved lenders require scores of at least 640.

FHA loans

Best for:

Low credit score, low down payments

What you need to know:

This is the go-to program for many first-time home buyers with lower credit scores. The Federal Housing Administration allows down payments as low as 3.5% for those with credit scores of 580 or higher. The FHA will insure loans for borrowers with scores as low as 500 but requires a 10% down payment for a score that low. Mortgage insurance is required for the life of an FHA loan and cannot be canceled.

USDA loans

Best for:

Low down payments, rural

What you need to know:

A USDA home loan is a zero-down-payment mortgage for eligible rural and suburban home buyers. USDA loans are issued by the U.S. Department of Agriculture through the USDA Rural Development Guaranteed Housing Loan Program. There are income limitations, which vary by region. Applicants with credit scores of 640 or higher receive streamlined processing. Those with scores below that must meet more stringent underwriting standards.

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Mississippi first-time home buyer programs

Mississippi Home Corporation helps home buyers with down payments and closing costs. The programs target first-time buyers as well as veterans, residents of low-income areas and rural teachers.

MHC highlights and eligibility requirements

HIGHLIGHTS

  • Some programs are available for repeat buyers.

  • Assistance is in the form of grants and forgivable loans.

  • Mortgage interest tax credit is available.

ELIGIBILITY

  • Home must be in Mississippi and owner-occupied.

  • Borrower must meet minimum credit score requirements.

  • Property must be a single-family home, town house, condominium or qualified manufactured home.

Smart Solution

Best for:

Low mortgage rates, down payment assistance, closing cost assistance

What you need to know:

This program offers competitive interest rates, lower mortgage insurance premiums and down payment assistance. The down payment assistance is in the form of a 10-year loan for 3.5% of the purchase price, at the same interest rate as the primary mortgage. An income limit applies.

Mortgage Revenue Bond 7 (MRB7)

Best for:

Down payment assistance, closing cost assistance

What you need to know:

Provides $7,000 for a down payment and closing costs. It's mostly for first-time home buyers, but also for repeat buyers who are veterans or those buying in specific low-income areas. The assistance is an interest-free loan that is forgiven after 10 years. The program places limits on household income and home price, which vary by county.

Housing Assistance for Teachers (HAT)

Best for:

Educators, down payment assistance, closing cost assistance

What you need to know:

This state program is designed to entice qualified teachers to move to rural areas. By agreeing to teach in a targeted district for at least three full school years, home buyers are eligible for a grant of up to $6,000 for a down payment and closing costs. The buyer has to contribute at least 1% of the home’s purchase price toward the down payment.

Mortgage Credit Certificate

Best for:

Tax credits

What you need to know:

The Mortgage Credit Certificate allows a first-time home buyer to claim a tax credit of 40% of the interest paid annually on the mortgage, capped at $2,000. Limits apply on household income and home price.

Your next step

Visit Mississippi Home Corporation's homeownership programs page for information on how to get started and find out which program is right for you. MHC doesn't lend money or take loan applications itself. To apply, follow the link to the program you're interested in; you should see another link to a list of participating lenders.

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