Iowa Down Payment Assistance Programs

 Iowa Down Payment Assistance Programs
Iowa Down Payment Assistance Programs

The majority of the Iowa down payment assistance programs are meant for first time home buyers. A first time home buyer is typically described as an individual who has not owned a home in the past three years. However, the state has a few down payment assistance programs that are available for people who have owned a property in the last three years.

The state administered community development block grant is given to small units of the local government. These units must be involved in initiating and completing community development activities. This grant was authorized in 1974 by the Congress. It gives states and local governments grants to aid in the development of housing and creation of employment opportunities for low and middle income people. This explains why it is used to assist first time home buyers to meet their partial down payment costs.

The CDBG is used to run another program called Entitlement Communities. This program focuses on developing communities by providing a suitable environment and decent housing conditions. The Entitlement communities program focuses on large cities and urban centers. The grant is released annually. The state assists in down payment in various ways. For example, the state can give an interest rate of 5.25% with no down payment assistance, or an interest rate of 5.99% coupled with down payment assistance.

The other Iowa down payment assistance programs are city programs. For example, there is a city program that offers to reduce the principal value by $10000, assist with 95% of the closing cost and half of the down payment cost. In fact some of the Iowa down payment assistance programs offer grants (up to $1500) to aid in standard repairs. These repairs should be aimed at raising the housing conditions to meet standard minimum requirements set by the state authorities. These programs have been essential in the development of communities and cities.

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FirstHome and FirstHome Plus Programs This Iowa down payment program offers first time buyers a 25 or 30 year loan. The Plus program offers up to $2,500 in grant funding to be used for Iowa down payment and/or closing costs. To qualify for both: there is no minimum Iowa down payment requirement, homes cannot cost more than $250,000, and Iowa borrowers must occupy the house as their primary residence. Iowa borrowers must have a minimum credit score of 640, a maximum debt to income ratio of 45 percent, and they must show an ability to repay the loan.

HFA Preferred Risk Sharing This Iowa down payment program, used in conjunction with one of the programs listed above, gives home buyers the opportunity to put just 3 percent Iowa down and still avoid mortgage insurance. However, Iowa borrowers will be subject to above market interest rates to compensate for the lack of MI. According to the Iowa Finance Authority, HFA Preferred Risk Sharing option still provides for the lowest monthly payment when compared to an FHA mortgage or a conventional mortgage with mortgage insurance.

Homes for ns and Homes for ns Plus Programs Homes for Iowans offers 25 or 30 year loans with no first time restriction. Homes for Iowans Plus provides up to $2,500 for closing costs and Iowa down payment. Participants must meet income eligibility, homes cannot cost more than $305,000 and be a primary residence, Iowa borrowers must have a minimum credit score of 640, and a maximum debt to income ratio of 45 percent.

Military Homeownership Assistance Program This Iowa down payment program eligible service members and veterans can receive a $5,000 grant to assist with a Iowa down payment or closing costs. The grant can be used with a qualifying mortgage or cash purchase. To be eligible, Iowa borrowers must have had an honorable discharge or be the surviving spouse of such an individual. Service members can purchase a single family residence which includes stick built homes, modular or manufactured homes attached to a permanent foundation, condominiums, town homes and properties containing up to four units where one unit will be used as the service member’s primary residence.


Regardless of which type of down payment program, you will first need a mortgage. Below are mortgages that require low or no down payments:

No Down Payment Mortgages – mortgages that require no down payment

USDA Rural Loan – the purpose of the Single Family Housing Direct Home Loan is to assist low- and very-low-income applicants obtain decent, safe and sanitary housing in eligible rural areas by providing payment assistance to increase an applicant’s repayment ability. There is no down payment. Payment assistance is a type of subsidy that reduces the mortgage payment for a short time. The amount of assistance is determined by the adjusted family income.

VA Home Loan – VA helps Service members, Veterans, and eligible surviving spouses become homeowners. As part of our mission to serve you, we provide a home loan guaranty benefit and other housing-related programs to help you buy, build, repair, retain, or adapt a home for your own personal occupancy. There is no down payment as long as the sales price doesn’t exceed the appraised value.

 

Low Down Payment Mortgages – mortgages that require up to 3.5% down payment

FHA Mortgage Loan – the purpose of the FHA Home Mortgage Loan is to provide mortgage insurance for a person to purchase or refinance a principal residence. The mortgage loan is funded by a lending institution, such as a mortgage company, bank, savings and loan association and the mortgage is insured by HUD. A down payment of just 3.5 percent is required and may consist entirely from “gift funds.” The credit score requirement is 580.

Home Possible® Advantage Mortgage – the purpose of the Home Possible® Advantage mortgage by Freddie Mac is to offer low down payments for low- to moderate-income homebuyers or buyers in high-cost or underserved communities. Down Payment can come from a variety of sources, including friends and family, employer-assistance programs and secondary financing.

The HomeReady™ Mortgage – the purpose of the HomeReady™ mortgage by Fannie Mae is to provide flexibility for applicants buy home with down payments as low as 3%, below market mortgage rates, co-borrower flexibility, additional income sources and reduced mortgage insurance costs.

More places to find assistance on down payment:

HUD Programs

The US Department of Housing and Urban Development (HUD) offers the following programs:

Good Neighbor Next Door Program

The Good Neighbor Next Door Program was created by U.S. Department of Housing and Urban Development (HUD) to help law enforcement officers, pre-Kindergarten through 12th grade teachers, firefighters and emergency medical technicians buy homes. The biggest benefit of the Good Neighbor Next Door Program is the 50% discount of the home’s list price. The only catch is that the home owner must commit to live in the property for 36 months as their sole residence.

To learn more about the Good Neighbor Next Door Program, click here.

Section 184 Loan – The Indian Home Loan Guarantee Program

The Section 184 Indian Home Loan Guarantee Program is a mortgage for American Indian and Alaska Native families, Alaska villages, tribes, or tribally designated housing entities. In 1992 Congress created this program to help Native American Communities with homeownership.

Section 184 loans helps borrowers buy homes with a low down payment and flexible underwriting. Moreover, the loan does not need to be used only on properties on native lands. Purchase of an existing home for single-family residences. Also allowed are new construction, rehabilitation, and refinance.

To learn more about Section 184, click here.

Iowa Housing Agencies

Iowa housing agencies are your best resource for down payment assistance programs. Through funding from HUD, the purpose of these agencies is to ensure that affordable housing is available for everyone.