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oregon first-time home buyer programs

Both the federal and Oregon state governments offer loan programs in an effort to simplify the entire mortgage application process for newbies. There are a number of choices available, depending on your income, down payment amount and other typical factors. 

If you want some help as you take your first steps toward homeownership, you may want to consult with a financial advisor. Use SmartAsset’s financial advisor search tool to get paired with as many as three advisors in your area.

Federal First-Time Homebuyer Programs

Before we get into the details of the programs designed specifically for Oregonians, we’ll discuss a handful of federal programs that anyone can access. You’ll want to look at both federal and state options when searching for the right mortgage.

FHA Loans

Pros – Low down payment requirement
– Flexible credit approval
Cons – Bigger down payment needed for those with a worse credit score
Eligibility – At least 3.5% of the home’s purchase price as down payment
– Credit score of at least 500
Best For – Anyone lacking a clean credit history or sufficient savings for a typical down payment

The U.S. Federal Housing Administration backs FHA loans, which are a great option for homebuyers of any background. While conventional home loans usually require a 20% down payment, FHA loans only require you to provide 3.5% of your home’s value at the time of purchase.

To get the maximum FHA benefit, you’ll need a FICO® credit score of at least 580. Don’t worry if yours is lower, though. You will just be required to make a down payment closer to 10%, which is still half of a typical down payment. Even with the credit score requirement, an FHA loan is one of the easiest federal programs to qualify for.

VA Loans

Pros – Very low down payment requirement
– Low closing costs
– No private mortgage insurance requirement
Cons – Long application process
– Requires payment to the VA fund
Eligibility – Must be a current or former military member, spouse, or other beneficiary
– Credit score of at least 620
Best For – Low-income veterans with limited savings

The Department of Veterans Affairs insures VA loans to help military families struggling financially after the completion of their service. They do not require any down payment or private mortgage insurance.

To qualify, you will need a FICO® credit score of at least 620 and pay a VA funding fee, which can range anywhere from 1.25% to 2.4% of your home’s value. Aside from the funding fee, there are almost no other costs attached to a VA loan.

Perhaps best of all, VA loans don’t require private mortgage insurance (PMI), typically obligatory on mortgages that don’t have down payments of at least 20%. The government will back that part of your risk. Plus, with VA loans, closing costs tend to be cheaper than they are with conventional and other mortgages.

USDA Loans

Pros – No down payment requirement
– Flexible credit approval
Cons – Only available in select areas
– Strict eligibility requirements
Eligibility – Must earn less than 115% of the adjusted U.S. median income
– Home must be in a rural or semi-rural area
Best For – Low- to mid-income homebuyers willing to live outside a city

A United States Department of Agriculture, or USDA, loan is legally known as a “Section 502 Single Family Housing Guaranteed Loan Program.” These mortgages are designed to attract homebuyers to rural, or semi-rural, places around the U.S. In most cases, USDA mortgages completely eliminate the need for a down payment.

If your credit score falls a bit lower on the FICO® scale, you may have to pay a down payment of around 10%. That’s still significantly lower than the typical 20%. Keep in mind that only those with an income level lower than 115% of the current U.S. median income that have been denied a conventional loan qualify.

Good Neighbor Next Door Program

Pros – Flat 50% discount on the home’s purchase price
– Ability to sell home and keep all the equity after three years
Cons – Only available in select areas for select individuals
– Must live in the home for at least three years after purchase
Eligibility – Must be a police officer, firefighter, emergency medical technician or teacher
Best For – Emergency personnel or teachers with little in savings for a down payment

The Good Neighbor Next Door Program is more of a discount than a loan. It allows emergency personnel and teachers to pay only half the purchase price of a home. They can be combined with a conventional, VA, or FHA mortgage, or homebuyers can opt to pay cash.

To qualify, the home must be located within a “Revitalization Area” as titled by the Department of Housing and Urban Development (HUD). Plus, the homebuyer must agree to make the home your primary residence for at least three years. Once you meet your three years, you can sell the home and retain any profit.

Fannie Mae/Freddie Mac

Pros – Low down payment requirement
– Flexible credit approval
– Multiple loan styles available
Cons – Could come with higher interest rates
Eligibility – In some cases, there are no income requirements
Best For – Anyone that can’t afford a typical down payment and doesn’t qualify for other federal programs

Most federal homebuyer programs include the use of an approved lender. The federal government also sponsors their own mortgage lenders, known as Freddie Mac and Fannie Mae. Each lender has a selection of loans geared to anyone buying a first home.

The HomeReady® loan from Fannie Mae requires down payments as low as 3%, making it a great choice for anyone who’s strapped for cash, has a credit score of at least 620 and makes an income at or near the U.S. median. With a HomeReady® loan, you must have private mortgage insurance at the time of purchase. Once you’ve accrued 20% equity in your new home, you can cancel it.

If that doesn’t work for you, check out Home Possible® mortgages from Freddie Mac, with a down payment of just 3%. Home Possible® loans come in 15- to 30-year fixed-rate and 5/5, 5/1, 7/1 and 10/1 adjustable-rate terms. It also requires cancelable private mortgage insurance. Perhaps best of all, you won’t need a lengthy credit history to qualify.

NADL

Pros – Flexible credit approval
– No down payment requirement
– No private mortgage insurance requirement
– Low closing costs
Cons – Only available in select areas for select individuals
Eligibility – Home must be located on allotted lands, Alaska Native corporations, Pacific Island territories or federally-recognized trusts
Best For – Native American veterans without the necessary income or savings to afford a down payment

A Native American Direct Loan (NADL) is another mortgage program backed by the Department of Veteran Affairs. It comes with impressive perks, like 0% down payment and a set interest rate. The interest rate currently sits at 4.5%, though that is subject to change based on market and Prime Rate fluctuations.

Just like normal VA loans, NADLs don’t require a high credit score or private mortgage insurance. To make things even more tempting, NADLs also involve significantly lower closing costs than a standard home loan.

Oregon First-Time Homebuyer Programs

oregon first-time home buyer programs

The Oregon Housing and Community Services (OHCS) and Oregon Bond Residential Loan Program work together to offer low-interest mortgages and upfront assistance grants. They help low- to moderate-income homebuyers in the Beaver State maximize their purchase power and achieve affordable monthly payments. Household income and home price limits vary by county and household size. Furthermore, every borrower must complete a homebuyer education course before closing.

RateAdvantage Home Loan

Pros – Very low interest rates
– No prepayment penalty
Cons – Typical down payment requirements
Eligibility – Household income and purchase price dependent on county and home size
– Must complete a homeownership education class
Best For – Low- to moderate-income individuals who can’t afford typical mortgage payments

RateAdvantage offers the lowest interest rates of any OHCS program. In fact, rates are much lower than most mortgages. That means borrowers will have lower monthly payments and save more in the long-term. Best of all, there’s no prepayment penalty if your financial situation changes.

RateAdvantage homebuyers can use an FHA, USDA or conventional mortgage to secure their home’s purchase. But while there are many benefits to this program, lowered down payment stipulations are not among them – you’ll still need to make a 20% down payment.

CashAdvantage Home Loan

Pros – Low interest rates
– Up to 3% in closing cost assistance
– No prepayment penalty
Cons – Typical down payment requirements
Eligibility – Household income and purchase price dependent on county and home size
– Must complete a homeownership education class
Best For – Low- to moderate-income individuals who need help with the upfront costs of homeownership

A CashAdvantage loan is very similar to the offerings through the RateAdvantage program. The interest rates are a little higher, but still much better than those available in the general market. There also isn’t any prepayment penalty in case you want to pay the loan sooner than planned. You can use essentially any style of mortgage with the CashAdvantage program, including FHA, VA and conventional loans.

One of the best perks is the cash assistance that CashAdvantage provides. Depending on your application, you could receive up to 3% of the mortgage amount to help cover closing costs.  The assistance comes in the form of a grant, so no repayment is expected. Just keep in mind that you’ll have to provide the typical 20% down payment and the assistance cannot be used to fund any investment requirements for other mortgage programs.

Oregon Down Payment Assistance

Pros – Up to $15,000 in down payment and closing cost assistance
– Can be used with any type of mortgage
Cons – Strict household income limits
Eligibility – Must complete a homeownership education class
– Other requirements vary by provider
Best For – Home buyers that don’t have enough savings for a typical down payment or closing costs

Qualified organizations throughout Oregon provide down payment assistance grants for low- and moderate-income homebuyers. They award buyers with up to $15,000 to help cover a down payment and closing costs. Exact amounts and qualification requirements vary by provider, but there are individual income limits for all.

As with RateAdvantage and CashAdvantage, buyers must complete a homeownership education course to qualify. These courses are available at Oregon Homeownership Centers and online.

Tips for Managing a New Home Loan

oregon first-time home buyer programs

  • Remember that homeownership isn’t just a monthly mortgage payment. As you plan your budget, factor in homeowners insurance premiums, property taxes, and maintenance fees for a more complete picture.
  • No matter where you buy a home, the purchase will impact your budget. Consider seeking the counsel of a financial advisor. SmartAsset’s financial advisor matching service will match you with up to three fiduciary financial advisors in your area. You can then review their qualifications and interview them to decide which one you want to work with.

Photo credit: ©iStock.com/eskaylim, ©iStock.com/LightFieldStudios, ©iStock.com/spyderskidoo

Liz Smith Liz Smith is a graduate of New York University and has been passionate about helping people make better financial decisions since her college days. Liz has been writing for SmartAsset for more than four years. Her areas of expertise include retirement, credit cards and savings. She also focuses on all money issues for millennials. Liz's articles have been featured across the web, including on AOL Finance, Business Insider and WNBC. The biggest personal finance mistake she sees people making: not contributing to retirement early in their careers.
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