Purchasing a home is a dream for many North Dakota residents who might find it difficult because of limited income. Fortunately, there are assistance programs available to first time home buyers in North Dakota administered by the state. At the state level, there are currently two low-cost mortgage programs and two down payment/closing cost assistance programs. There are also a handful of others administered at the county and local level.
All state-administered first time home buyer programs in North Dakota are made available through qualified mortgage lenders throughout the state. To find one of these mortgage lenders you can simply visit the state website or ask your real estate agent. When you find a qualified mortgage lender they will walk you through the process of applying for assistance and securing your mortgage. Just be sure you know exactly what you are agreeing to before you sign on the dotted line. Some first time home buyer programs come with strings attached that people regret later on.
North Dakota Housing Finance Agency (NDHFA)
The North Dakota Housing Finance Agency (NDHFA) is the state agency charged with facilitating affordable housing for all residents of North Dakota. They do so by offering low interest loans, down payment and closing cost assistance, rehabilitation loans, Habitat for Humanity loan buybacks, and home buyer education resources. North Dakota's Industrial Commission oversees the NDHFA with help from a 6-member citizen advisory panel.
FirstHome Program
North Dakota's FirstHome program is a partnership between the NDHFA and participating lenders. Under this program lenders originate low-interest mortgages and then sell them to the NDHFA. A FirstHome mortgage may be serviced by the originating lender or the state agency, depending on the circumstances of the purchase.
In order to qualify you must be a first time home buyer who has not owned a principal interest in a residence for the last three years. An exception to that qualification is made in certain targeted areas where the state is trying to encourage more home ownership. Furthermore, you must meet minimum eligibility requirements, complete a homeownership education program, and occupy the home as your primary residence after closing.
HomeKey Program
For families and individuals with extremely low income, the HomeKey program may be their only option for buying a first home. This program is also a 30-year product originated by participating lenders. To make it easier for low income families to afford, the interest rate charged during the first year is at least 1% lower than a FirstHome mortgage. After that, the interest rate and monthly payment are increased two times over the next couple of years. After the second adjustment the interest rate and payment remains constant for the remainder of the mortgage term. This program can be used in conjunction with the state's down payment and closing cost assistance programs. There are certain restrictions such as minimum income, minimum credit score, and home occupation.
Start Program
North Dakota's Start program is designed for moderate income first time home buyers who only need help with out-of-pocket expenses. This program is offered in conjunction with a Start First mortgage and is offered as a secondary loan at the time of closing. In order to qualify the borrower must accept a Start First mortgage and contribute at least $500 toward closing costs and down payment. The amount of assistance under this program is equal to 3% of the value of the Start First mortgage.
Downpayment and Closing Cost Assistance Program
This program is offered to low income individuals who meet income and other requirements. It provides an interest-free secondary loan which spans the life of the mortgage. It must be repaid by the time the first mortgage is settled, or at the time the house is sold or assumed. The amount of money available under this program is a $3,000 or 3% of the mortgage amount, whichever is greater. To qualify borrowers must obtain a first mortgage from NDHFA, contribute at least $500 of their own funds, and meet credit requirements.