Iowa first-time homebuyer assistance programs

Have your eye on a home in the Hawkeye State? Residential real estate in Iowa is fairly reasonable, with Redfin reporting a median sales price of $228,300 — well below the current national median price tag of $414,500, according to data from the U.S. Census Bureau and U.S. Department of Housing and Urban Development.

Still, embarking on your first home purchase can come with hurdles, including having enough funds set aside for a down payment and closing costs, not to mention the home itself.

To help, the Iowa Finance Authority (IFA) offers affordable mortgages and down payment assistance programs for aspiring homeowners throughout the state — many of them geared towards novices. Taking advantage of these types of programs can help you become a first-time homebuyer in Iowa that much sooner.

Iowa first-time homebuyer programs

The IFA has two main home loan programs: FirstHome and Homes for Iowans. Both have income and purchase price limits and a minimum credit score requirement of 640 — although, in some instances, you might be able to qualify with other financial and income information. The FirstHome and Homes for Iowans programs include conventional, FHA, VA and USDA loans.

IFA FirstHome

The FirstHome program is specifically for first-time homebuyers, which the IFA defines a first-time buyer as someone who hasn’t owned a home in the past three years. If you’re a veteran or buying in a “targeted area,” however, you could still qualify.

FirstHome offers below-market interest rates and fees on various types of mortgages, and your credit score won’t impact your rate. If your income is less than 80 percent of the area median income (AMI), you might also be eligible for lower mortgage insurance premiums through this program. For a conventional FirstHome loan, you can choose between a 25- or 30-year term.

• Requirements

  • 3 percent down payment for a conventional loan
  • 640 minimum credit score
  • Maximum 50 percent debt-to-income ratio
  • Must complete homebuyer education course for conventional loan
  • Must meet IFA income limits, which vary by county and range from $96,500 to $134,550 for a household of two
  • Must be a primary residence
  • Must be a single-family home
  • Must not exceed purchase price limit of $510,000 in most areas, or up to $624,000 in targeted areas

IFA Homes for Iowans

The Homes for Iowans program is available to both first-time and repeat homebuyers. Your credit score won’t affect your mortgage rate, though a 640 minimum is required.

• Requirements

  The eligibility requirements are the same as the FirstHome program, with these exceptions:

  • Must meet income limit of $163,800, or 80 percent or less than the area median income (AMI) for a conventional loan
  • Must not exceed purchase price limit of $624,000

Iowa down payment assistance

IFA FirstHome and Homes for Iowans DPA

The IFA doesn’t offer separate down payment assistance. You can opt for the aid in conjunction with the FirstHome and Homes for Iowans mortgage programs.

• FirstHome: The assistance can be either in the form of a $2,500 grant or a second mortgage.
• Homes for Iowans: Only the second mortgage is available.

The second mortgage loan terms are the same for both programs: You can finance up to 5 percent of the home’s purchase price, with no maximum. There are no monthly payments; the loan is repayable when the home is sold, refinanced or the first mortgage is paid in full. The funds can be used for both down payments and closing costs.

• Pros and cons

  Pros

  • Can be used for the down payment and closing costs
  • Multiple assistance options

  Cons

  • Second mortgage requires eventual repayment

   

IFA Military Homeownership Assistance Program

The IFA’s Military Homeownership Assistance Program offers a grant of $5,000 to help eligible service members, veterans and surviving spouses. It can be paired with either a FirstHome or Homes for Iowans mortgage, or used with a non-IFA mortgage (but applicants must use an IFA-approved lender). The funding for this program might be limited, however, so it’s important to check with the IFA to see what’s currently available.

• Requirements

  • Must be an eligible military member
  • Must be approved for the grant before closing
  • Must be buying a single-family home, condominium, townhome or four-unit home (as long as one of the four units is your primary residence)

• Pros and cons

  Pros

  • Can be used for the down payment and closing costs
  • Open to condos, townhomes or multi-family properties

  Cons

  • Service requirements are relatively strict

City-specific homebuyer assistance programs

Des Moines homebuyer assistance programs

The City of Des Moines offers funding for residents through select nonprofit organizations. These nonprofits are HOME, Inc., Greater Des Moines Habitat for Humanity, Neighborhood Finance Corporation and Neighborhood Development Corporation.

For more information about homebuyer assistance programs in Des Moines, residents are encouraged to reach out to these nonprofits directly.

Neighborhood Finance Corporation homebuyer assistance program

The Neighborhood Finance Corporation (NFC) is one organization that partners with the City of Des Moines. It offers an Advantage Purchase Loan that helps eligible homebuyers in designated NFC lending areas access affordable financing, down payment and closing cost assistance and renovation support.

Buyers can qualify for a forgivable renovation loan of up to $10,000 when using NFC financing to purchase a home. The program also offers a first mortgage up to $250,000 and a second mortgage up to 15 percent loan-to-value (LTV). In addition, the program offers deferred assistance for both down payment and closing costs.

• Requirements

  • Must buy in an NFC lending area
  • Must use NFC financing to qualify for renovation assistance
  • First mortgage capped at $250,000 (exceptions require approval)
  • Minimum of 5 percent down; 3 percent must be your own funds
  • Owner-occupancy required for loan forgiveness
  • Closing cost assistance based on eligibility

• Pros and cons

  Pros

  • No private mortgage insurance
  • No income limits

  Cons

  • Limited to homes in designated areas

Iowa City down payment assistance

The City of Iowa City has a partnership with GreenState Credit Union and Hills Bank to address the racial homeownership gap in the city. Iowa City offers forgivable down payment assistance up to $24,999 for eligible buyers financing a home through one of the partner lenders.

The program supports borrowers who don’t meet traditional lending criteria and provides free homebuyer education and financial counseling. The assistance is structured as a forgivable loan, fully forgiven after 10 years of home occupancy.

• Requirements

  • Must be a first-time homebuyer
  • Purchase price limit of $276,000
  • Income under 80 percent of the area median income
  • Limited to single-family homes and condos
  • $250 minimum buyer contribution
  • Two months of reserves required
  • Completion of HUD-approved homebuyer education
  • The home must be in Iowa City and outside of the floodplain
  • The home must pass inspection and be vacant or owner-occupied

• Pros and cons

  Pros

  • Can be used for the down payment and closing costs

  Cons

  • Limited property types

Other Iowa first-time homebuyer loans

FHA Loans

Federal Housing Administration (FHA) loans, insured by that government agency, have less stringent credit requirements and lower down payment minimums than conventional loans. Homebuyers with credit scores as low as 580 are eligible for an FHA loan as long as they make a 3.5 percent down payment. Homebuyers with credit scores as low as 500 are eligible as long as they make a 10 percent down payment.

VA Loans

VA loans are guaranteed by the U.S. Department of Veterans Affairs and are intended to help eligible veterans, active-duty service members and surviving spouses purchase a primary residence, refinance a current mortgage or cover renovation costs. These loans are attractive to first-time homebuyers because they include no required down payment and no private mortgage insurance (PMI); they also offer competitive interest rates.

USDA Loans

To qualify for a USDA loan, you must live in a designated rural area. For first-time homebuyers meeting this criteria, USDA loans are a good option because they don’t require a down payment. However, compared to conventional loans, USDA loans come with additional upfront and annual fees.

Get started

To learn more about Iowa homeownership and down payment assistance programs, consider starting with the Iowa Finance Authority website. You can also learn more about low- or zero-down payment mortgages in Bankrate’s guide to first-time homebuyer loans and programs.

Curious to learn more about homeownership in Iowa? Here are some resources that might help:

• Compare Iowa mortgage rates
• Read reviews on Iowa mortgage lenders
• Shop for homeowners insurance in Iowa

• Explore first-time homebuyer programs by state

  Alabama first-time homebuyer programs	Montana first-time homebuyer programs
  Alaska first-time homebuyer programs	Nebraska first-time homebuyer programs
  Arizona first-time homebuyer programs	Nevada first-time homebuyer programs
  Arkansas first-time homebuyer programs	New Hampshire first-time homebuyer programs
  California first-time homebuyer programs	New Jersey first-time homebuyer programs
  Colorado first-time homebuyer programs	New Mexico first-time homebuyer programs
  Connecticut first-time homebuyer programs	New York first-time homebuyer programs
  Delaware first-time homebuyer programs	North Carolina first-time homebuyer programs
  Florida first-time homebuyer programs	North Dakota first-time homebuyer programs
  Georgia first-time homebuyer programs	Ohio first-time homebuyer programs
  Hawaii first-time homebuyer programs	Oklahoma first-time homebuyer programs
  Idaho first-time homebuyer programs	Oregon first-time homebuyer programs
  Illinois first-time homebuyer programs	Pennsylvania first-time homebuyer programs
  Indiana first-time homebuyer programs	Rhode Island first-time homebuyer programs
  Iowa first-time homebuyer programs	South Carolina first-time homebuyer programs
  Kansas first-time homebuyer programs	South Dakota first-time homebuyer programs
  Kentucky first-time homebuyer programs	Tennessee first-time homebuyer programs
  Louisiana first-time homebuyer programs	Texas first-time homebuyer programs
  Maine first-time homebuyer programs	Utah first-time homebuyer programs
  Maryland first-time homebuyer programs	Vermont first-time homebuyer programs
  Massachusetts first-time homebuyer programs	Virginia first-time homebuyer programs
  Michigan first-time homebuyer programs	Washington first-time homebuyer programs
  Minnesota first-time homebuyer programs	Washington D.C. first-time homebuyer programs
  Mississippi first-time homebuyer programs	West Virginia first-time homebuyer programs
  Missouri first-time homebuyer programs	Wisconsin first-time homebuyer programs
  	Wyoming first-time homebuyer programs