10 Best States for First Time Homebuyers

New York – New York has several first-time homebuyer programs that offer fixed-rate mortgage financing at competitive rates and down-payment assistance.

Conventional Plus Program: This new program is all-encompassing. Not only is this program available to first-time and repeat buyers, but it also can be used to purchase or refinance a home in New York. Conventional Plus combines 30-year fixed-rate mortgages with down-payment assistance that can also be used to pay for closing costs including the upfront mortgage-insurance premium. According to the state, “With all these combined features including flexible underwriting guidelines, Conventional Plus offers a lower monthly payment than most mortgages.”

Down Payment Assistance Loan: This can now be used to pay “all or a portion of a one-time mortgage insurance premium” to reduce the monthly mortgage payment.

Energy Star: Energy Star homes can be financed at interest rates that are 0.375 percent lower than the state’s standard interest rates on other programs with down-payment assistance. This program can be used in conjunction with the Achieving the Dream and the Construction Incentive Program.

Colorado – Colorado Housing and Finance Authority Advantage (PDF): The Advantage program caters to all borrowers: first-time and repeat buyers, as well as to homeowners. This program offers a 30-year fixed-rate mortgage at “affordable” interest rates with no mortgage-insurance requirement.

SmartStep Program: First-time buyers can get 30-year fixed-rate mortgages at below-market interest rates. Buyers must contribute at least $1,000.

SmartStep Plus Program: The “plus” program offers the same advantages as the standard program, but it offers a low-interest rate, 30-year second mortgage to help buyers pay with their down payment and closing costs. To qualify for one or both SmartStep programs, buyers must contribute $1,000.

HomeOpener and HomeOpener Plus Programs: This program is nearly the same as the SmartStep programs, except the purchase-price limits are waived.

Second Mortgage Loan Program: This program — used in conjunction with the two sets of “plus” programs mentioned above — is designed to help buyers pay for their down payment and closing costs. This second mortgage is available for up to 3 percent of the first mortgage amount and at the same interest rate. If you refinance or transfer the loan, or if the home is no longer your principal residence, this second mortgage is due in full.

Tennessee – Great Choice Program: The Great Choice and Great Choice Plus programs offer one interest rate that will not increase with down-payment assistance, zero charge to lock in a rate, and there is a 0 percent, 10-year term for down-payment assistance.

New Start Loan Program: Originally a pilot program, this is now permanent.

Great Rate Program: Tennessee is offering rates as low as 3.6 percent on 30-year mortgage loans under its Great Rate program. Closing costs can come from a variety of sources, including the borrower or seller, or as a gift.

Great Advantage Program: Similar to the Great Rate program, the advantage here is that in exchange for a slightly higher interest rate, borrowers receive 2 percent of the loan amount to cover the down payment and closing costs.

Great Start Program: While the interest rate on this loan is 4.2 percent, first-timers will receive 4 percent of the loan amount to cover the down payment and closing costs.

New Start Loan Program: This program encourages low-income first-time buyers to purchase new homes.

North Dakota – HomeSmart Program: First-time homebuyers using the FirstHome Program can receive $100 toward housing-related expenses by completing “an approved classroom homebuyer education workshop.”

FirstHome Program: Like most first-time buyer programs, FirstHome offers fixed-rate financing at attractive rates.

HomeKey Program: The HomeKey program is designed for low-income borrowers, offering an even lower interest rate than the FirstHome program. According to the North Dakota Housing Finance Agency website, “During the first year of the loan’s amortization period, qualified borrowers receive an interest rate that is approximately 1 percent below the standard FirstHome rate. The interest rate and monthly payments are stepped up twice during the next two years, holding constant for the remaining term of the mortgage.”

Start Program: North Dakota describes this program as the “extra little boost” many first-time homebuyers need. While the interest rates are “slightly higher,” buyers receive a financial sum equal to 3 percent of the first mortgage. Buyers must contribute $500, and the Start Program cannot be used with any other down-payment assistance.

North Carolina – The North Carolina Housing Finance Agency website lists just two programs available to first-timers: the N.C. Home Advantage Mortgage — which incorporates down-payment assistance — and mortgage-credit certificates.

First-time homebuyers in North Carolina are eligible for 30-year fixed-rate loans at competitive rates, as well as down-payment assistance.

FirstHome Mortgage Program: North Carolina offers first-time buyers a 30-year fixed-rate mortgage with “interest rates that are below or competitive with market rates.” Down payments vary from 0 percent to 3.5 percent of the sales price. Some mortgage lenders may refer to this as a mortgage revenue bond loan.

Down Payment Assistance: North Carolina provides buyers with as much as $8,000 as an interest-free second mortgage to cover the down payment and closing costs. Borrowers must contribute $1,000. Unless you sell, transfer, refinance or default, payment on the principal isn’t due for30 years.

Second Mortgage Program: If you’re in the market for a newly constructed home, you may qualify for a $25,000 second mortgage; the max amount is $25,000 or 20 percent of the sales price, whichever is less. There is a $5,000 minimum for this assistance, which targets buyers who earn below the median income.

New Jersey – Live Where You Work Program: This has been expanded from targeted urban areas to statewide.

First Time Homebuyer Program: Qualified first-time homebuyers in New Jersey can secure 30-year home loans at below-market interest rates with down payments of as little as 3.5 percent. However, down payments must come from the borrower, who must have a total monthly debt-to-income ratio of less than 38 percent.

Smart Start Program: This second-mortgage program provides down-payment assistance of up to 4 percent of the first-mortgage amount. There is no interest rate on this second mortgage. Areas where a buyer may purchase a home are limited in this program.

Purchase/Rehab Mortgage Program: First-time buyers can receive low interest rates for loans that fund the purchase and repair of a home. Borrowers must meet Federal Housing Administration 203(K) loan requirements.

Home Plus: If you’re in need of immediate repairs, the Home Plus program allows first-time buyers to take advantage of low interest rates while rolling up to $15,000 worth of acceptable repairs into the first mortgage.

Unfortunately, the Sandy Homebuyer Assistance Program, developed in the wake of Superstorm Sandy, is no longer accepting applications because the program has exceeded the available funds.

Ohio – Mortgage Credit Certificates MCCs are available to first-time homebuyers to help reduce their yearly tax burdens.

First-time Homebuyer Program: Ohio offers qualifying first-time homebuyers below-market interest rates on 30-year fixed-rate loans.

Down Payment Assistance: A grant from the state provides first-time buyers with 2.5 percent of the purchase price to put toward their down payment and closing costs. Given the size of the grant, borrowers should expect to pay for some expenses out of their own pockets. Buyers who take advantage of this down-payment assistance will have a mortgage rate that’s 0.5 percent higher than rates that the Ohio Housing Finance Agency offers.

Grants for Grads Program: The grads program provides 2.5 percent of the home’s purchase price to assist with the down payment and closing costs in the form of a second mortgage. There is no interest rate, and it’s forgivable after five years as long as the buyer remains in the home for that period. Buyers must have a high school degree or equivalent and some form of postgraduate degree within the past two years to qualify.

New Home Sweet Home Program: This Ohio program is designed for first-time buyers who purchase new homes. Buyers will receive an extended rate-lock period of up to 180 days while the construction is completed. In exchange for the extended lock period, the interest rates at the time of the lock will be 0.25 percent higher than current OHFA rates.

Montana – Score Advantage Down Payment Assistance Program: This program provides up to $6,500 to help cover down payment and closing costs. This “junior loan” has a fixed rate and no prepayment penalty.

First-time Homebuyers: Montana offers first-time homebuyers 30-year fixed-rate mortgages at below-market interest rates. Down payment requirements range from 0 percent to 3.5 percent of the sales price.

First-time Homebuyer Savings Account Program: This program allows would-be first-time buyers to set up a savings account to help them prepare for the costs of homeownership. First-time buyers can contribute any amount they wish, and deposits can be made for as long as 10 years or until a home is purchased.

NeighborWorks Montana: This statewide effort provides buyers with a second mortgage loan to help pay for a down payment and closing costs. NeighborWorks provides down-payment assistance anywhere in Montana not covered by the state’s other programs. Borrowers will encounter asset limitations of $5,000 liquid cash and $70,000 in total family assets. Interest rates and terms vary by income.

Mortgage Credit Certificates: The MCCs in Montana have the same impact as those in other states. However, first-time buyers cannot use them in conjunction with a Montana First-time Homebuyer mortgage.

Connecticut – Housing Finance Authority Preferred Loan Program: This program is designed only for first-time buyers to provide below-market interest rates on mortgages with “low mortgage insurance costs.” Whether or not borrowers can also use the Downpayment Assistance Program is up to the mortgage insurer.

Homebuyer Mortgage Program: Connecticut offers 30-year fixed-rate mortgages at or below-market interest rates to qualified first-time buyers statewide. This loan may only be used to purchase a primary residence.

Downpayment Assistance Program: First-time buyers who qualify for the Homebuyer Mortgage program can also qualify for down-payment assistance up to 25 percent of the purchase price. This assistance offers a “supplementary” loan at below-market interest rates for borrowers to come up with a significant down payment.

Homeowner’s Equity Recovery Opportunity Loan Program: The H.E.R.O. program is a neighborhood-stabilization effort that encourages first-time buyers to purchase and fix up foreclosed, abandoned, deed-in-lieu and short-sale properties.

Washington – Home Advantage Rebound: Designed to be combined with a Home Advantage First Mortgage, the Home Advantage Rebound program provides down-payment assistance to those buying a foreclosed, bank-owned or a short-sale property.

Home Advantage First Mortgage Program: The state’s primary mortgage program offers qualified borrowers 30-year fixed-rate loans at competitive rates.

Home Advantage Downpayment Assistance Program: This portion of the Home Advantage program offers buyers a 0 percent interest, 30-year second mortgage designed to help cover down-payment costs. You can borrow up to 4 percent of the total loan amount.

Mortgage Credit Certificates: Availability of MCCs is based offered on a first-come, first-serve basis. Buyers can use the MCC program in conjunction with the Home Advantage program.

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About The Author

Joseph Sabeh Jr.

Please let me introduce myself, I am Joseph Sabeh, Jr a full time licensed professional realtor. I have been with Executive Homes Realty for over 13 years and was trained by my late father and Broker, Joseph Sabeh. I recently incorporated the company and we moved the office to 43513 Mission Blvd just last summer. I could not have found a more honorable place to work. After earning my experience selling high end Ralph Lauren suits and studying business management in southern California, I decided to pursue my dream of selling real estate and working with my father. He had already had such an excellent reputation and established a niche market of high end clientele that catered to the very best. I wanted to become the consummate professional just like him and have strived to become just that being just a phone call or email away from getting back to my client’s immediate needs! Known by my clients for my tenacity, perseverance , and excellence in negotia- tion(Certified Negotiation Expert), I have always strived to meet my clients high demands and goals. As a result of my professionalism, I have achieved an extensive portfolio of referrals from past and present clients. I credit my current values from my upbringing of my parents and the credit is due to them without question. Their integrity, pride, and willingness to sacrifice for the better of my life and my sister’s always left a mark on me that one day I will pass on. Their desire to achieve a better life and live it to the fullest is one that some families dream of and I certainly am appreciative of all of the education and etiquette I have learned from them both. I have sold condos up to 3.2 million dollar homes and I am here for any and all of your future real estate needs and wishing you the very best experience in your future real estate endeavors with me.

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