Providing financial assistance to first time home buyers is the goal of hundreds of state agencies, local entities, and nonprofit organizations around the country. For Iowa first time home buyers, there is no shortage of such programs with both low-cost mortgage and down payment assistance options. A good place to get started in finding out about assistance available in your area is to talk your real estate agent, mortgage broker, or banker. You may also visit the HUD and Iowa Finance Authority websites.
Iowa Finance Authority
The Iowa Finance Authority is a state agency created by Iowa's legislature in 1975. Its original mission was simply to facilitate and assist low and moderate income individuals in obtaining affordable housing. Since then the agency's role has expanded to include several other areas, but it still remains faithful to its original mission of affordable housing. Through the agency first time home buyers who meet program guidelines have access to low interest loans and down payment assistance. There are currently four programs available for first-time home buyers in Iowa:
- First Home
- First Home Loss
- Homes for Iowans
- Mortgage Credit Certificate
First Home
The First Home program provides the first time home buyers in Iowa with a low-cost, fixed-rate mortgage through a local lending institution. Interest rates on these mortgages are significantly lower than those of a unconventional loan, and some require an extremely low, or even no downpayment. Additionally, mortgages granted through the First Home program have a single interest rate across the board. This means that certain individuals will not pay higher interest rates based on income or credit score.
Of course, income requirements do apply with the First Home program. Homeowners are also restricted in total purchase price and must make the acquired home their primary residence within 60 days of closing. First Home mortgages are provided through FHA lenders and local banks who will verify decent credit history and a stable employment and income. Veterans and other qualified repeat home buyers may still be eligible for this program under certain conditions.
First Home Plus
Loans made under the First Home Plus program are very similar to First Home loans in terms of their structure, eligibility requirements, and interest rates. However, these loans also offer further cash assistance of up to $2500 to qualify borrowers. This money is designated for use towards down payment, closing costs, or certain qualified repairs. The First Home Plus grant must be used in conjunction with an IFA loan and are limited to individuals whose annual income does not exceed $49,900.
Homes for Iowans
The Homes for Iowans program is designed to assist home buyers who do not qualify for either of the previous two programs. Homes for Iowans is available for both first-time and repeat home buyers, and provides an affordable interest rate for a fixed 30-year period. Interest rates do not change based on the borrower's credit. Participants in this program may request a Title Guaranty Owner's Certificate which is provided free of charge and offers a defense in case a title defect is found.
To be eligible for Homes for Iowans, the purchase price of the desired home must not exceed $289,000. The buyer must have a good credit history, demonstrate the ability to make monthly mortgage payments, and occupy the home as his primary residence within 60 days of closing. There are certain income eligibility requirements that vary from one county to the next.
Mortgage Credit Certificate
A federal program called the Mortgage Credit Certificate is one offered in most states. This program does not provide direct cash assistance; rather, it allows first time home buyers to reduce the amount of federal income tax they pay, leaving them with more disposable income for mortgage payments.
The certificate is good for the life of the mortgage as long as the homeowner maintains the property as his primary residence. If he does not, or if he decides to sell his home within the first nine years of ownership, the federal government is within its rights to recover the full value of the credit from the homeowner.
Other Home Buyer Programs
Like most states, Iowa does have many other first time home buyer programs at the city and county level. These programs are almost always down payment assistance programs (DAP) made through county or municipal entities or nonprofit organizations. The following is a list of such programs as currently listed on the HUD website:
- Benton County Homebuyer Assistance Program (HAP)
- Council Bluffs Heritage of Council Bluffs Program (HCBP)
- Davenport United Neighbors, Inc. DREAM Home Buyers Program (DREAM)
- Des Moines New Construction Program (NCP)
- Fort Dodge Homebuyers Assistance Program (HAP)
- Hawarden Iowa Lamb Corporation Employer Down Payment Gift Program (GIFT)
- Iowa Individual Development Account Gift Program (IDA)
- Iowa State RHI Local Housing Assistance Program (LHAP)
- Iowa Winterhaven Inc Down Payment/Closing Cost Assistance Program (GIFT)
- Multi-Counties Homeward, Inc. Home-Buyer Program (ABP)
- Northwood Housing Assistance Program Down Payment Assistance (DPA)
- Polk County Housing Trust Fund Gap Subsidize Program (GSP)
- Sioux City Affordable Home Ownership Program
- Wright County First Time Home Owners Program (FTHP)