Are you looking to purchase your first home in the Portland, Oregan area? If yes, you may feel like your new home is out of reach.
Don’t worry Portland still has some affordable housing options, and with the right support, you can take advantage of First-Time Homebuyer incentives.
Read on to learn about getting the support you need to purchase your first home.
Definition of a First Time Home Buyer
You may think that the definition of a first time home buyers, is someone who has never owned their own home. That is true, but there are other instances where the government identifies you as a first time home buyer.
•If you fall into one of these categories, you can also take advantage of services to support first time home buyers. These include:
•If you have had no ownership in a principal residence within the last 3 years.
•You are a single parent who only owned property with their former spouse.
•You are a displaced homemaker, meaning you were unpaid for caring for your home, children, or elderly parent and your needs were paid for by a spouse.
Keep in mind, divorce and separation are difficult emotionally and financially, we specialize in helping you rebuild your life through homeownership.
•If your home was an RV, Tiny House or other residences that didn’t have a permanent foundation.
•You have only owned property that was not in compliance with state or local building codes and cannot be brought up to code.
If you meet one of these criteria or have never owned a home, you can qualify for Oregan specific as well as National programs to help you purchase a home.
Oregan First Time Home Buyer Programs
Oregan has 3 programs to support the first time homebuyer: Oregan RateAdvantage Home Loan, Oregan Cash Advantage Home Loan, Oregon Down Payment Assitance Grant. The first two are through the Oregon Bond Residential Loan Program (OHCS).
Before you begin, make sure you know your household income (to determine eligibility for some programs) and use a mortgage calculator to take the first step in determining how much home you can afford.
The worst thing a new homebuyer can do is purchase more home than they can afford. You don’t want to be struggling to pay your mortgage for the next 30 years.
It is also a good idea to pre-qualify for your loan before you begin looking for your new home. While a mortgage calculator will get you part of the way to how big a loan you can qualify for final lending decisions may be different. Often time this difference is due to your credit score.
Know your credit score before you start the homebuying process. Ideally, you can work to improve your score by clearing up errors and paying off debt before you being house hunting.
Do you still have questions about first-time homeownership or want to pre-qualify your loan? Schedule an appointment to discuss your specific needs.
Oregon Bond Residential Loan Program
This program is supported by the Oregan bond sales program. It supports both the Oregan RateAdvantage and Oregan Cash Advantage loan programs.
While there are county dictated requirements, the goal of the program is to help first time home buyers find affordable mortgage loans.
This is accomplished by providing below-market interest rates on loans and in some cases a 3% closing cost assistance grant. The program also has an Oregon Down Payment Assistance Grant, which provides up to $15,000 to support the down payment on your new home.
These programs may also waive the first time buyer requirement of other loans if you purchase in a targeted area. Even though Portland is a booming real estate market, they still have many areas that are targeted by this program.
There are some limits to this program. The options available vary by county and target area. Homebuyers must also complete a homebuyer education program before they close on their loans.
Oregon RateAdvantate Home Loan
Oregon RateAdvantage Home Loan provides the lowest fixed interest rates. Loans can be serviced through conventional, FHA, or USDA loan. Keep in mind, this loan does require a 20% down payment.
Oregon Cash Advantage Home Loan
The Oregon Cash Advantage Home Loan offers below-market loans plus a grant of 3% of the mortgage costs to be used for closing. Because this is a grant, the monies given do not have to be repaid, the interest rate for this loan is higher than for the RateAdvantage loan.
Again this can be a conventional, FHA, or USDA loan as long as you have the 20% down payment.
Oregon Down Payment Assistance Grant
Oregon Down Payment Assistance is a grant for up to $15,000. It can be used in conjunction with any other loan program. There are income requirements for this loan.
Because this program is funded by local organizations, the amount of the grant and specifical eligibility requirements vary. You can check specific eligibility requirements here.
In addition, to qualify for this grant you must complete homeownership education as well as agree to participate in follow up education.
There are over 71 distinct areas around Portland, be sure to explore them all to find the ones that best suit your needs.
National First Time Home Buyer Programs
Below are 3 of the most common national first-time buyer programs.
Federal Housing Association (FHA) Loans
FHA loans can help you if you have less than perfect credit.
If your credit score is above 580, you only need to put down 3.5% of your purchase price as a down payment. If your credit score is as low as 500, you will be required to put down 10% of your purchase price as a down payment. The FHA does require mortgage insurance for the life of the loan.
There are other eligibility requirements for an FHA loan, which are:
- A Debt-to-Income Ratio less than 56.9%.
- This home must be your primary residence.
- Proof of employment
- Documentation of steady income and downpayment funds.
FHA loans are very common among first time home buyers.
Department of Veterans Affairs (VA) Loans
The VA loans provide generous support to service members, veterans, and surviving spouses. Loans through the VA require zero down payment and offer low-interest. In addition, mortgage insurance is not required for a VA loan.
There is no minimum credit score requirement through the VA, although many lenders will impose their own limit called an “overlay”. With few exceptions, however, you will want to have a history of making on-time payments in order to qualify.
U.S. Department of Agriculture (USDA) Loans
These loans are issued by the USDA specifically for rural homebuyers. In some cases, a USDA loan can be used for home purchases in outlying suburbs. This is a zero down payment loan.
Briefly, to qualify for a USDA loan you must:
- Meet income-eligibility and property eligibility requirements
- Use this home as your primary residence
- Be a U.S. Citizen, U.S. non-citizen national or Qualified Alien
- Have not been barred from federal programs and have the legal capacity to incur the loan obligation.
The first step for this process is to investigate the areas surrounding Portland you like and determine if you and your potential new home meet income and property eligibility requirements.
Finding Affordable Housing in Portland
Oregon is proactively supporting new homebuyers in purchasing their first home. If you do not qualify for the programs listed above, don’t fret, there are national conventional loans for first-time homebuyers
Fannie Mae and Freddie Mac both offer first time home buyers affordable conventional home loans. For this loan, a credit score of 740 earns you the best interest rates but you will qualify if you have a score as low as 620.
If you are able to put 20% down on your home, you do not have to carry mortgage insurance. If you meet Fannie-Mae and Freddie Mac’s eligibility criteria you can reduce your down payment to 3% of the purchase price.
Eligibility for this loan requires:
- Only 1 borrower must be a first-time homebuyer
- It is a single unit that functions as your primary residence
- Mandatory homebuyer education
This program helps many find an affordable way to finance their first home.
Regardless of where in Portland you choose to live, there are affordable home options as well as affordable financing options. In order to benefit from this program, you must do your research to find the best program for your unique financial needs.
Where to Find Support Financing Your First Home
Hopefully, you now understand the Portland does have affordable housing options. Contact us we can help you navigate financing your home.
We focus on the details to help you find the best loan option for your specific needs.