Missouri first-time homebuyer assistance programs

Getting ready to buy your first home can be exciting and daunting all at once — especially in the competitive market of Missouri, where prices are up nearly six percent year-over-year, according to Redfin.

To help provide affordable homebuying opportunities to first-time buyers in the state, the Missouri Housing Development Commission (MHDC) has special programs for first-time or repeat homebuyers, military veterans and those purchasing homes in designated target areas. Through the agency, you could be eligible for a low- or no-down-payment mortgage with a lower interest rate and down payment assistance.

Missouri first-time homebuyer loan programs

MHDC First Place Loan Program

The MHDC First Place Loan is for first-time homebuyers (or those who haven’t owned a home in the past three years) and veterans. The program comes with a competitive fixed rate, often below-market, which can apply to a conventional, FHA, VA or USDA loan.

First Place loans are available with or without down payment assistance. No-assistance First Place loans have a lower interest rate than First Place loans paired with down payment help.

If you’re a military veteran, you don’t need to be a first-time buyer, but you do need a DD Form 214 or statement of service showing that you’ve served on active duty within the past 25 years.

• Requirements

  • • Must be a first-time buyer, qualified veteran or repeat buyer in a target area

  • • Must have a credit score of 640 or higher

  • • Debt-to-income ratio cannot exceed 45 percent (or 50 percent for FHA and Government Sponsored Entities, but you’ll need a credit score of at least 680)

  • • Must meet income limits (vary by location and household size)

  • • For one-family residences: Home cannot exceed purchase price limits of $510,939 (non-targeted areas) or $624,481 (targeted areas)

  • • For two-family residences: Home cannot exceed purchase price limits of $654,187 (non-targeted areas) or $799,562 (targeted areas)

• Pros and cons

  Pros

  • More affordable interest rates
  • Open to single-family homes, duplexes, townhomes and other types of properties
  • Is 100% forgivable

  Cons

  • Higher interest rates if you receive down payment assistance
  • Must occupy the home within 60 days of purchase

MHDC Next Step Program

Designed for both first-time and repeat homebuyers, MHDC’s Next Step Program provides affordable mortgages with or without down payment assistance. The program includes conventional, FHA, VA and USDA loans.

The income limits for each county, which vary by household size, are generally higher than the income limits of the First Place program, making a Next Step loan an option for first-time buyers who don’t meet the First Place criteria.

• Requirements

  • Must have a credit score of 640 or higher
  • Debt-to-income ratio cannot exceed 45 percent (or 50 percent for FHA and Government Sponsored Entities, but you’ll need a credit score of at least 680)
  • Must meet income limits (vary by location and household size)
  • For one-family residences: Home cannot exceed purchase price limits of $510,939 (non-targeted areas) or $624,481 (targeted areas)
  • For two-family residences: Home cannot exceed purchase price limits of $654,187 (non-targeted areas) or $799,562 (targeted areas)

• Pros and cons

  Pros

  • Open to first-time and repeat buyers
  • More affordable interest rates
  • Is 100 percent forgivable
  • Includes single-family homes, duplexes, townhomes and other types of properties

  Cons

  • Higher interest rates if you combine it with down payment assistance
  • Must occupy the home within 60 days of purchase

Missouri down payment assistance and grants

MHDC down payment assistance

Borrowers who qualify for an MHDC First Place or Next Step mortgage can receive up to 4 percent of the mortgage amount in a forgivable second mortgage. This second mortgage doesn’t need to be paid back as long as you stay in the home for 10 years.

• Pros and cons

  Pros

  • • Repayment isn’t required (as long as you stay in the home for 10 years)

  • • Can be used for down payment and closing costs

  • • Open to first-time and repeat buyers

  Cons

  • • Funds must be repaid if you don’t maintain the home as your primary residence for 10 years

City specific homebuyer assistance programs

Springfield Down Payment Assistance Loan Program

If you’re a first-time buyer, displaced homemaker or single parent in Springfield, you can receive up to $9,000 in down payment and closing cost assistance. The funds are provided as a deferred loan, which is forgiven after 10 years (as long as you’ve maintained the property as your primary residence). You’ll need a conventional, FHA or VA loan to qualify for the program.

• Requirements

  • Must be a first-time buyer, displaced homemaker or single parent
  • Must have a credit score of 650 or higher
  • Debt-to-income ratio cannot exceed 43 percent
  • Must purchase a home in an eligible area of Springfield
  • Home purchase price cannot exceed $150,000
  • Household income cannot exceed 80 percent of the area median income (varies by household size)
  • Must complete a homebuyer education class

• Pros and cons

  Pros

  • Loan is forgivable after 10 years of living in the home as a primary residence
  • Zero interest loan
  • Can be used for down payment and closing costs

  Cons

  • Must repay the loan if you move or the home is no longer a primary residence before 10 years
  • Cannot be used with adjustable-rate mortgages
  • Only available for single-family properties

Columbia Homeownership Assistance Program

Like Springfield, Columbia also provides assistance in the form of a zero-interest, 10-year forgivable loan. First-time buyers and displaced homemakers can receive up to $10,000 to put toward a down payment and closing costs when purchasing a home within Columbia city limits.

• Requirements

  • Must be a first-time buyer or displaced homemaker
  • Must have a credit score of 600 or higher
  • Must purchase a home in an eligible area of Columbia
  • Home cannot exceed purchase price of $237,000 (existing home) or $273,000 (new construction home)
  • Must meet income limits (vary by household size)
  • Must contribute at least $500 of own funds
  • Must complete homeownership counseling

• Pros and cons

  Pros

  • Funds don’t require repayment if the home is your primary residence for at least 10 years
  • Can be used for down payment and closing costs
  • Requires a minimum 600 credit score
  • Can be used for single- or multi-family properties
  • Has zero interest

  Cons

  • Repayment required on a prorated basis if you move, sell or refinance within the first 10 years
  • Must provide $500 of own funds toward the home purchase
  • Cannot be used for prepaid expenses such as taxes and insurance

Other Missouri homebuyer assistance programs

Mortgage credit certificate (MCC)

A mortgage credit certificate (MCC) allows first-time homebuyers and veterans to save money by claiming mortgage interest as a federal tax credit, usable for as long as they live in their home. The MCC in Missouri is worth up to $2,000 per year.

• Requirements

  • Must be a first-time buyer, qualified veteran or repeat buyer in a target area
  • Must have a credit score of 640 or higher
  • Debt-to-income ratio cannot exceed 45 percent (or 50 percent for FHA and Government Sponsored Entities, but you’ll need a credit score of at least 680)

• Pros and cons

  Pros

  • Includes conventional and government-backed loans
  • Includes single-family homes, duplexes, townhomes and other types of properties

  Cons

  • To get the maximum MCC credit rate (45 percent), you’ll need to pair it with the Next Step Loan Program; otherwise, the standalone MCC credit rate is 25 percent

Other Missouri first-time homebuyer loans

In addition to Missouri state homebuying programs, consider any of these nationally available first-time homebuyer loan programs, including:

• FHA loans – If you have a lower credit score or limited savings, consider an FHA loan. These loans are widely available, have a minimum credit score of 580 and require a down payment of as little as 3.5 percent.
• VA loans – If you’re a member of the military or veteran, you could qualify for a VA loan, which doesn’t require a down payment.
• USDA loans – USDA loans don’t have a down payment requirement, but are only available to borrowers buying in a USDA-eligible rural area. You typically need a credit score of 640 or higher to qualify.
• Good Neighbor Next Door program – This HUD program has a very low down payment requirement on homes in certain areas, coupled with the ability to save 50 percent on the purchase price.

Get started

Now that you know some options available to first-time homebuyers in Missouri, you’re ready to get started with your home purchase. Here are some next steps:

• Work on your credit score. It’s the most important factor in determining your mortgage rate, so focus on boosting your number, if possible, before your home search.
• Do your homework. For details on any of the Missouri Housing Development Commission’s homebuyer programs, connect with a participating lender in your area.
• Compare lenders. Regardless of which program you choose, it’s important to shop around for mortgage offers. By comparing lenders, you can find the most competitive interest rate and loan terms. Be sure to read lender reviews, as well, to get an idea of the customer experience.
• Get preapproved. While house hunting, you’ll need a preapproval on hand from the lender you plan to work with to show sellers that you’re a serious buyer.
• Research homeowners insurance policies. It’s also a good idea to shop around for a homeowners insurance company in Missouri. Comparing providers can help you save money and choose one with the best coverage for your needs.

• Explore other 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