Home Buyer Assistance

It’s no secret that the real estate market pretty much everywhere in the United States is pretty crazy right now. Housing inventory is low (almost nonexistent in some places) and prices are high and going higher. Some of this has been offset by historically low mortgage interest rates, but even those have now risen to above 4% for a thirty-year mortgage (which is still great historically, but not nearly as attractive as when they were in the mid to high 2% range). When you combine that with the often low salaries that new teachers start with, many of whom also need to pay down student debt and purchase that first car, it’s a recipe for stress and frustration.

Before I go any further, I do want to mention that owning your own home is not a necessity, it’s a choice. I think most of us growing up in America have been told over and over again that home ownership is the “American Dream” and, that if you don’t own your own home, that you haven’t “made it” and aren’t “successful.” We do own our own home and I think it makes sense for many people who want to own a home, but I think the narrative that if you are renting you are somehow a “failure” and “throwing your money away” is both wrong and dangerous. I won’t take any more time in this post about this, but here are multiple blog posts that explore this:

But if you want to buy a home, none of those posts about the advantages of not buying a home really help. In an online class I’m teaching, several younger teachers have mentioned how difficult it is finding an affordable house to purchase, so I went looking for a few resources. I did not do an extensive search, so I’m sure there are many others, but here’s what I’ve found so far.

NACA (Neighborhood Assistance Corporation of America):

NACA’s mission is to provide the Best in America Mortgage to low-to-moderate income people and people purchasing in low-to-moderate income communities. Member’s status is either Priority or Non-Priority based on their income compared with the median income in the Metropolitan Statistical Area (“MSA”) where the property you are interested in purchasing is located. Priority Members, who have lower incomes, receive a significantly lower below market fixed interest rate and a much larger geographic area to purchase a home (details are provided below). Also, higher income Members purchasing in a lower income area also receive a significantly lower below market fixed interest rate.

Because housing prices and incomes vary tremendously, there’s no simple list you can look at to see if your income and area meet their requirements, but it’s probably worth contacting them to find out. For example, when I put my zip code in to find the median income in my area, I get

which means many young teachers in my neck of the woods are definitely in contention in terms of income.

CHFA (Colorado Housing and Finance Authority): While this is obviously specific to Colorado, there are similar agencies in every state. Interesting, the best summary I found about what they offered was actually on a different site:

CHFA has a number of programs for homebuyers, including:

CHFA FirstStep – CHFA’s FirstStep and FirstStep Plus programs provide a 30-year fixed-rate FHA loan to first-time homebuyers, veterans or any buyer purchasing in a targeted area, along with down payment assistance if needed. In addition to meeting CHFA general loan requirements, the home you’re buying and your income must be within the program’s purchase price and income limits, respectively.
CHFA HomeAccess – CHFA’s HomeAccess and HomeAccess Plus programs can provide a 30-year fixed-rate FHA or USDA loan to a first-time homebuyer or veteran who is either living with a permanent disability or is the custodial parent of a child living with a permanent disability. Like other CHFA programs, there are income and purchase price limits, but if you’re eligible, you can also obtain up to $25,000 in down payment assistance with your loan.
CHFA SectionEight – CHFA’s SectionEight and SectionEight Plus Homeownership programs can provide a 30-year fixed-rate FHA or USDA loan to a first-time homebuyer or veteran who’s also receiving Section 8 assistance from a Section 8 agency. You can combine this program with CHFA down payment assistance, but there’s a borrower income limit: $130,200.
CHFA SmartStep – CHFA’s SmartStep and SmartStep Plus programs provide 30-year fixed-rate FHA, VA or USDA loans and CHFA down payment assistance. Like the SectionEight program, the income limit is $130,200.
HFA Advantage and Preferred loans – CHFA also offers Fannie Mae HFA Preferred and Freddie Mac HFA Advantage loans for up to 97 percent financing, including an Advantage loan for low-income borrowers (called the Very-Low Income Program, or VLIP). These loans can also be paired with CHFA down payment assistance.
CHFA offers two types of down payment assistance: a grant and a second mortgage. With the CHFA down payment assistance grant, you can receive funds for up to 3 percent of your first mortgage (for example, $9,000 on a $300,000 mortgage). The grant doesn’t have to be repaid. It can only be combined with a SectionEight or SmartStep first mortgage, however.

Colorado Government Housing Programs: A nice list of city, county and state resources. (You can find other states here.)

None of these will solve the problem that there are few homes on the market or that they are very expensive, but they might make just enough difference to get someone into the home they really want. If you know of other great resources, please add them in the comments.