Homeownership is the first step toward building financial security for most families. Unfortunately, according to a NeighborWorks Housing Survey, 70% of homebuyers are unaware that there are programs available to help them afford it. Not all of these programs are restricted to low-income or first-time home buyers in Portland! Why spend more than you have to? Read on to see what you may qualify for.
Down Payment Assistance in Portland
The National Association of Realtors reports that, for first-time homebuyers, the “most difficult step in the home buying process was saving for a down payment.” These programs are great because they help buyers get over that hurdle.
Down Payment Assistance Grant from the National Homebuyers Fund
What is it? Up to $10,000 (5% of the purchase price) you don’t have to pay back that can be put toward a down payment and/or closing costs on a home. Buyers who take out a home loan through the FHA, VA or the USDA can apply for the Down Payment Assistance grant through their lender.
Who is eligible? This grant is not limited to first-time homebuyers (though you will need to be the primary occupant of the home). This program is aimed at median-income earners (in the $68,000 range for an individual in Portland). However, there are minimum credit score and debt-to-income ratio requirements; talk to your lender to learn more.
Anything else you should know? Just a Fun Fact: The funds for the Down Payment Assistance grant come from penalties paid by lenders who failed to comply with federal regulations leading to the housing market crash and global financial crisis.
Mortgage Assistance Program (MAP) from Portland Housing Center
What is it? Portland Housing Center offers qualified borrowers a low-interest loan for down payment and closing costs. Loan amount is up to $50,000; borrowers must come up with $500 for the down payment. By participating, buyers can eliminate their need for mortgage insurance.
Who is eligible? First-time homebuyers in Multnomah, Washington, Clackamas counties in Oregon and Clark County, Washington. To qualify for the MAP, borrowers must have a total household income that is less than 80% of the area median income, and have a minimum credit score of 640.
Anything else we should know? Buyers receiving mortgage assistance through this program must attend homebuyer education classes. To use MAP, the sales price of the home cannot exceed the current Federal Housing Administration loan limits, currently $424,100. The MAP program can also help with purchasing a condo or townhouse.
Mortgage Credits and Lowered Interest Programs in Oregon
Your mortgage broker may quote you one rate, but savvy home buyers can find ways to pay less and enjoy more home!
The IRS Mortgage Credit Certificate (MCC)
What is it? The keyword in MCC is “Credit”. Specifically, it’s a tax credit that allows you to reduce your federal income taxes if you buy a Portland home with a mortgage that carries interest. It’s a little bit different from a the typical housing grant or low-interest loan. Home buyers get to claim the credit on their taxes at the end of the year, effectively reducing the amount of tax they pay by an amount equal to 20% of their mortgage interest.
Who is eligible? Currently, Portland is the only city in Oregon that offers the MCC to homebuyers; outlying cities don’t qualify. Other than that, the program is restricted to buyers who have not owned a home in the previous three years (unless the home is in certain target areas of Portland), who plan to live in the home as their primary residence, and make less than $81,400 a year (one- or two-income household). The property being purchased must be less than $454,177 (Portland’s median home price is $399,500).
Anything else you should know? Be sure your lender is qualified to enroll you in the MCC by checking the City of Portland website before apply for the loan. If you’ve already purchased the home, unfortunately, it’s too late to enroll. Qualified buyers should definitely go for it, since the MCC decreases debt-to-income ratio and can help you borrow more or at a lower rate.
The Oregon Bond Residential Loan Program
What is it? Bond… Oregon Bond. Actually, a program that offers below-market interest rates to homebuyers so that they can put more money toward their home and less toward paying the bank! The Oregon Bond Residential Loan Program is very straightforward, offering below-market interest rates on home loans and an option for cash assistance toward down payment and closing costs.
Who is eligible? Oregon residents who have an annual income within the program limits (currently $97,680 for a one- to two-person household). In certain Portland neighborhoods, all home buyers, not just first-timers, have the opportunity to apply for these loans. Check with your lender or Oregon Housing and Community Services to see which neighborhoods are in a Target Area for expanded Oregon Bond loan opportunities.
Anything else you should know? Houses that qualify for the Oregon Bond Residential Loan Program can be new or previously owned, sitebuilt homes, manufactured homes (permanently attached to acceptable foundations), condominiums, or units in a Planned Unit Development. They can be located anywhere in Oregon. The maximum purchase price varies by county and whether the property is in a Target Area. Apply now, and get the low rate for the life of your loan (no pre-payment penalty!).
Get Creative for Your Portland Home
Just because many programs exist for those buying a home for the first time in Portland, doesn’t mean there’s something for everyone. If you don’t qualify for any of the above, considering the following creative ideas:
- Open an Oregon-only Individual Development Account that will match you dollar-for-dollar to save for a down payment.
- Look into a renovation loans that can allow you to buy a fixer-upper even when banks say “no”.
- Don’t forget that Portland has become very ADU (additional dwelling unit) friendly and rental income (even potential rental income) could help you qualify for a mortgage with the right property.
As a real estate agent, I advise you not to give up until you’ve talked to an experienced mortgage lender. I’d be happy to give you a referral.
Have you always dreamed of owning a home in Portland? With all of the assistance available to first-time and low-income buyers, there is no reason not to go for it. Just keep in mind that the information is current as of this posting; follow up with the individual agencies or your mortgage broker to confirm program availability, eligibility requirements, and all the other information.
The first step is to find a great buyers’ agent. Call our team today to see if we are a good fit for you.
Stephen FitzMaurice, Realtor is a top 5% real estate agent in the U.S. and a top 1% agent in the Portland Metro. Principal Broker in Oregon, Managing Broker in Washington he has been licensed since 2003 for residential real estate sales in the Portland Metro area. Call him direct: 503–714–1111. Pay less (4.5% commission max.) and get more with his top 1% listing team or buy your next home with his excellent top 1% buyer’s team. For our Clark County, Washington buying and selling services go here.