In 2015, most first-time home buyer programs will be found at the local and state level, not at the federal level. State and local agencies often partner with lenders, developers, and non-profit organizations to provide support for low- and moderate-income home buyers. Support typically comes in the form of grants or low-interest loans for upfront expenses, such as down payments and closing costs.
Here’s an updated outlook for first-time home buying programs in 2015.
What Is a First-Time Home Buyer Program, Exactly?
Buyer assistance programs come in several forms, ranging from educational opportunities to actual monetary funds. The type and level of support varies widely from one program to the next. For example:
- Some state agencies partner with lenders to offer home loans with favorable terms for first-time buyers.
- Some programs focus on education, offering free classes and counseling for consumers.
- Some offer down-payment assistance in the form of zero-interest, deferred-payment loans.
- Others provide a combination of these things, or other forms of support.
- The federal government has also used tax credits in the past, as a home-buying incentive.
Most first-time buyer programs have the same goal. They help consumers overcome the hurdle of upfront housing costs, in order to (A) facilitate the purchase of the home and (B) increase homeownership within the targeted area.
During the housing boom, there were many of these programs offered by government agencies, nonprofits, and private companies alike. But they have declined in number since the housing market crashed. In 2015, first-time home buyers will have fewer programs available for assistance and funding. And most of them will exist at the state and local level.
Examples of State and Local Programs
The state of Georgia offers assistance for first-time home buyers, and it’s a good example of what is typically available at the state level. The “Georgia Dream Homeownership Program” offers down-payment assistance for eligible borrowers, though the borrower must contribute at least $1,000 toward the upfront purchase costs. It is open to first-time buyers, defined as anyone who has not owned a house within the last three years. There are income limits as well. Borrowers must fall within a low- to moderate-income bracket, which is a common requirement for first-time home buyer programs in 2015.
Assistance programs can also be found at the city / metro level, and they are often more unique in terms of the features they offer. FHLBank Pittsburgh, which specializes in providing “low-cost funding for affordable housing,” offers a program called First Front Door. In short, first-time buyers can obtain funds for down payment and closing costs, as long as they make some level of contribution out of their own pockets. For every $1 contributed by the borrower, FHLBank provides $3 in grant assistance, up to a maximum of $5,000. Their next round of funding will be available early in 2015.
Maryland’s Department of Housing and Community Development runs the “Maryland Mortgage Program.” It is designed to help first-time home buyers with their closing costs, down payments, and escrow-related expenses. Maryland officials partner with in-state employers, developers and community organizations to offer zero-interest deferred loans, forgivable loans, and even cash grants in some cases. As with most of these assistance programs, household income is the primary eligibility consideration. High-income borrowers need not apply.
These are just three examples of first-time home buyer support available in 2015. There are literally hundreds of these programs spread across the U.S. While the specific requirements vary, there are three common features:
- First Timers: Assistance is typically limited to those who have not owned a home in the past, or at least not for the last few years. Three years was a common “cutoff” point for many of the programs we reviewed for this story.
- Income: There is usually a limit on household income. Support is typically reserved for low- and mid-income borrowers.
- Education: Program participants usually have to undergo some from of educational counseling on home buying, credit, mortgage finance, and related topics. The organizations offering assistance want to ensure that buyers are making well-informed decisions.
So how do you find down-payment assistance, grants, and other forms of first-time home buyer help in your neck of the woods? There are two ways to get started…
How to Find 2015 Programs in Your Area
There are several ways to find programs available within a particular city or state. The first way is simply to Google it (or whatever your preferred search engine might be). Do a search for “2015 home buyer program,” followed by the name of your city or the nearest metro area. Then do the same thing for your state. Be sure to include the year, so you can find the most current information available.
You can also use the Department of Housing and Urban Development (HUD) website to find home buying help in 2015. HUD maintains an electronic database of programs offered at the state, county and city level, all across the U.S. You can access the database through their website.
To get started, visit HUD.gov and use the search box provided. Do a search for your city followed by “home buyer programs.” Do the same thing for your state. (There used to be a main page for these searches, but HUD seems to be in the process of shuffling its website at the moment.)
Another Tax Credit Unlikely
We regularly receive questions about the likelihood of another tax credit program for first-time home buyers, like the one that was offered in 2008 – 2010. It seems unlikely.
It has been several years since the federal government subsidized home purchases by offering tax credits. The Housing Assistance Tax Act of 2008, which was signed into law by then-President George W. Bush, offered first-time home buyers a tax credit for purchases equal to 10% of the purchase price (up to a maximum of $7,500). That program expired in 2010, and there hasn’t been another one to replace it.
The new mantra on Capitol Hill, and within the White House, is to reduce government’s role in housing — not to expand it.
Additionally, the 2008 credit was criticized for being a short-term boost with little to no long-term value. A group of analysts from the Brookings Institution studied the federal tax incentive and concluded:
“The various tax and incentive programs designed to help arrest the collapse of the housing market during the Great Recession provided, as expected, a modest short-term boost to housing demand, but some of these effects were reversed after the expiration of the credits.”
Given all of this, it is unlikely that another tax credit will be offered in 2015. But there are still plenty of home-buying assistance programs available at the state and local level.
Disclaimer: This story offers an updated look at first-time buyer programs in 2015. It contains third-party information that is deemed reliable but not guaranteed. We make no claims or assertions about the accuracy of that information, or about the guidelines of specific programs. Readers are encouraged to research this topic further, using the techniques outlined above.