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Iowa First-Time Home Buyer Programs of 2019

March 20, 2019
Finding the Right Mortgage, Mortgages
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The Iowa Finance Authority is the state gateway to affordable mortgages. The IFA offers assistance to first-time home buyers as well as those who have previously owned a home. It also provides a military homeownership program for service members and veterans.

Buying your first home might be the highest financial hurdle you’ll ever face. It’s not just all the paperwork — or the thought of a 30-year payment commitment. It’s saving for the down payment that makes so many potential buyers think twice.

Yet these days it’s common to put less than 20% down. The Iowa Finance Authority offers assistance, grants and first-time home buyer programs designed to help you reach the number you need for that down payment.

National first-time home buyer programs

No search for mortgage assistance is complete without checking into nationally available loan programs. Millions of first-time buyers have taken advantage of the low- or no-down-payment loans offered by these government-backed or government-sponsored providers.

Conventional mortgage

National program

Best for

Low down payment

Limited mortgage insurance premiums

What you need to know

First-time home buyers can get a conventional home loan with as little as 3% down if the mortgage meets requirements set by Fannie Mae and Freddie Mac. And if you put at least 20% down, you won’t have to pay mortgage insurance. Most lenders require a minimum credit score of 620 to qualify for a

 

FHA loans

National program

Best for

Low credit score

Low down payment

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

 

VA loans

National program

Best for

Military

Low down payment

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

 

USDA loans

National program

Best for

Low down payment

Rural

What you need to know

The USDA home loan program encourages rural and suburban homeownership by offering zero-down-payment mortgages to lower-income buyers. Borrowers with nontraditional credit data, like rent or utility payments, can still apply, but those with a score of 640 or above will experience faster loan

 

Iowa Finance Authority highlights and eligibility requirements

Like all state housing authorities, the IFA has income and home purchase price limits that help define eligibility. You’ll generally need a credit score of 640 or higher, and a debt-to-income ratio of 45% or lower.

» MORE: Calculate your debt-to-income ratio

Highlights

  • IFA loan programs have interest rates that are typically lower than the going market rate.
  • Mortgages have fixed interest rates and 30-year terms.
  • Conventional loans that allow 3% down payments and have no — or low — mortgage insurance fees.
  • Some programs require no down payment at all.

Eligibility

  • First-time home buyers are defined as not having owned their primary residence in the last three years.
  • Service members and veterans generally have first-time home buyer requirements waived.
  • Repeat buyers can qualify for some programs by purchasing a home in specific Iowa neighborhoods.
  • The home must serve as your primary residence.

» MORE: Tips for first-time home buyers

Iowa Finance Authority first-time home buyer programs

FirstHome Program

State program

Learn more

at Iowa Finance Authority

Best for

First-time home buyers

Low down payments

Low mortgage insurance

What you need to know

This program offers 30-year fixed interest rates. Government-backed loans may offer zero-down payments, while conventional loans allow 3% down and may feature reduced or no mortgage insurance fees. Limits on property price and income apply.

 

Homes for Iowans

State program

Learn more

at Iowa Finance Authority

Best for

First-time home buyers

Low down payments

Repeat home buyers

What you need to know

This program is available to first-time as well as repeat home buyers. Again, the down payment will depend on the type of loan program chosen. Household income and home purchase price limits are higher than the FirstHome program.

 

FirstHome Plus Program

State program

Learn more

at Iowa Finance Authority

Best for

Down payment assistance

Closing costs assistance

First-time home buyers

What you need to know

When combined with the FirstHome Program, you will receive a $2,500 grant to apply toward your down payment or closing costs.

 

Homes for Iowans Plus Program

State program

Learn more

at Iowa Finance Authority

Best for

Down payment assistance

Closing costs assistance

Repeat home buyers

What you need to know

When combined with the Homes for Iowans Program, you will receive a $2,500 grant to apply toward your down payment or closing costs.

 

HFA Preferred Risk Sharing Program

State program

Learn more

at Iowa Finance Authority

Best for

First-time home buyers

Repeat home buyers

Low mortgage insurance premiums

What you need to know

If you choose a conventional mortgage loan, this program allows you to put just 3% down, but you don’t have to pay the typical monthly mortgage insurance costs that would come with such a low down payment. It is available with all of the above-mentioned loan programs. Because of this feature, your

 

Military Homeownership Assistance Program

State program

Learn more

at Iowa Finance Authority

Best for

Military

Down payment assistance

Closing costs assistance

What you need to know

If you are active military, a veteran or the surviving spouse of an eligible veteran, you may qualify for a $5,000 grant to apply toward your down payment or closing costs. You may also combine this benefit with one of the Plus grants offered under the FirstHome or Homes for Iowans program to accrue

 

Mortgage Credit Certificate Program

State program

Learn more

at Iowa Finance Authority

Best for

Tax credits

What you need to know

You can save up to $2,000 on your federal taxes each year for the life of your loan with a mortgage credit certificate. It’s a tax credit against half of the mortgage interest you pay annually.

Your next step

If these programs are looking pretty good to you, it may be time to talk to an IFA participating lender for more details. The lender will determine if you’re likely to qualify and let you know what information you’ll need to gather to complete a loan application.

» MORE: Best mortgage lenders in a variety of categories

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