Homeownership has long been part of the American Dream and nearly a decade removed from the financial crisis, Americans are feeling more confident about working towards homeownership. However, despite the rebound new home sales are still well-below average and being below the numbers we saw during the period prior the crisis (see chart below).
Fear, lasting memories of the Great Recession and student debt are some of the reasons holding back demand for homes. According to the National Association of Realtors, Generation X and younger Baby Boomers carry higher median education debt than the Millennial generation due to the fact that parents getting loans to pay for their children’s college has limited their ability to upgrade their home later in life. In addition, student debt for millennials hinders opportunities for their own homeownership. Such debt for young Americans, particularly those below 35, slows demand given this group accounts for 67 percent of first-time home buyers.
In this environment, it is important to know all of your purchase options, including government-backed programs to incentivize home ownership.
In the State of Iowa, first time home buyer options can be found on the Iowa Finance Authority’s website.
For now, though, let’s breakdown the basics of some of these programs:
- FirstHome
- 25- or 30-year, fixed rate mortgages
- For first-time home buyers who are purchasing a primary residence in Iowa
- The program also helps military veterans with discharges other than dishonorable and those vets who have not previously used a mortgage revenue bond program such as FirstHome to finance a home purchase
- All loans require a minimum credit score of 640 credit
- The program also includes other income and purchase price limits
- FirstHome Plus
- 25- or 30-year, fixed rate mortgages
- Also includes up to $2,500 in grant funding to help with down payment and closing costs
- For first-time home buyers who are purchasing a primary residence in Iowa
- The program also helps military veterans with discharges other than dishonorable and those vets who have not previously used a mortgage revenue bond program to finance a home purchase
- An individual borrower is limited to one-time use of this program and the program is not available to borrowers who have previously used a Plus grant
- All loans require a minimum credit score of 640 credit
- The program also includes other income and purchase price limits
Non-first time home buyers also have these options: Link
- Homes for Iowans
- 25- or 30-year, fixed rate mortgages for home buyers
- For both first-time and repeat home buyers who are purchasing a primary residence in Iowa
- Must apply for this financing by contacting an IFA Participating Lender
- The home must cost no more than $316,000 and must be located in Iowa
- The home must be occupied by the borrower as a primary residence immediately after closing
- All loans require a minimum credit score of 640 credit
- Homes for Iowans Plus
- 25 or 30-year, fixed rate mortgages for home buyers
- For both first-time and repeat home buyers who are purchasing a primary residence in Iowa
- Also includes up to $2,500 in grant funding to help with down payment and closing costs
- Must apply for this financing by contacting an IFA Participating Lender
- The home must cost no more than $316,000 and must be located in Iowa
- The home must be occupied by the borrower as a primary residence immediately after closing
- All loans require a minimum credit score of 640 credit
On top of programs through the State of Iowa, these links provide additional information for local programs. These are less known, but worth considering.
We hope this information was helpful for those of you looking to purchase a home. As always, we at MFG are available at any time to help make more sense of your financial options. Just give us a call.
