Must Know! First Time Home Buyer Grants, Loans, Programs – 2019 Guide

first time home buyer loan grant downpayment

As real estate agents, we love helping clients transition from renting to becoming first time home buyers in the Portland real estate market.

The biggest hurdle to making that happen is the first time home buyer down payment. Second-biggest is probably making that monthly mortgage payment! Either way, there are first time home buyer loan programs out there to help, whether they’re from government agencies, private non-profits or individual lenders.

Keep in mind that the following list of home buyer assistance programs is just a starting point. Financing your home purchase is a complicated series of decisions, and there are scams out there! That’s why we recommend home buyer education, whether you’re a first-time buyer or you’re re-entering the market. Many free or low-cost opportunities exist in Portland; go learn about home buying in person or do it online at your own pace! Check out the list here.

Now, on to the first time (and some non-first-time) home buyer programs, grants, and loans available to Portland home buyers.

Oregon Bond Residential Loan Program

About the program

  • If you qualify, the Oregon Bond is probably the simplest and most user-friendly way to save money on your first home. 
  • It’s reserved for first time home buyers (defined here and, for the most part, industry-wide, as any individual in Oregon who has not owned and occupied a primary residence in at least three years).
  • Qualified buyers must also be lower-income (visit their website for eligibility details).
  • There are also purchase-price limits for the home you buy using the Oregon Bond.

How it works: 

  • Oregon Bond offers a below-market interest rate and/or cash assistance (read first time home buyer downpayment grant) toward your closing costs.
  • Current rates on a 30-year mortgage offered as of July 2019: 3.25% standard or 4.25% with cash assistance.
  • Home buyers need to talk to a qualified lender in order to apply for the Oregon Bond program. Find one at Oregon Housing and Community Services.

The MCC Tax Credit

About the program

  • It’s a dollar-for-dollar tax credit that will reduce annual federal income taxes owed for Portland home owners with a mortgage.
  • Credit is given for up to 20% of the mortgage interest paid in that year. 
  • Only available to first-time home buyers within the City of Portland as of this writing. However, there are a few small blocks in NE Portland where you don’t have to be a first time homebuyer to qualify (see the map on the Portland MCC website).
  • The MCC also boosts home buyers’ purchasing power by reducing their debt-to-income ratio (something that lenders like to see as low as possible).

How it works

  • Obtain a loan through an MCC Approved Loan Officer
  • Take the tax credit every year that you keep the home loan, as long as the home remains your primary residence.

PHC’s Mortgage Assistance Program 

About the program

  • Offered direct through Portland Housing Center, a private non-profit that exists to support home buyers
  • In 2019, the eligibility requirements have relaxed a bit! 
  • First-time home buyers with incomes up to 100% of the area median income ($70,320 for a two-person household) qualify.
  • The MAP is a loan of up to $60,000 for down payment and closing costs at a low, fixed-interest rate.
  • It’s available in nearby Portland counties (Multnomah, Washington, Clackamas, and Clark County, WA).

How it works

  • Loan can cover up to 20% of the home’s purchase price and can eliminate the need for Private Mortgage Insurance (PMI).
  • Borrowers will need to first qualify for financing for the purchase of the home. After that, the down payment on the MAP loan is just $500.
  • Loan pre-approval is available; contact Portland Housing Center to get started.

PHB’s Home Purchase Assistance Program

About the program

  • Portland Housing Bureau offers this program through funding from the Federal Housing Administration, to encourage home ownership in Portland.
  • The program provides down payment and closing costs assistance for any qualified home buyer (not just first time), in exchange for a higher interest rate on the home loan.
  • Home must be in Portland City Limits and the loan must be through a private lender like a bank or mortgage company (not FHA).
  • Qualified buyers must have income less than $123,060; other eligibility requirements include a minimum credit score.

How it works

  • See a list of participating lenders.
  • First time home buyers who participate must enroll in home buyer education.
  • PMI may be required.

Guild Mortgage 3-2-1 Home Loan Program

About the program

  • Offered through Guild Mortgage, a private lender. 
  • Only available for first-time home buyers who meet income eligibility requirements, but there are no location restrictions.
  • As of this writing, Guild advertises that home buyers can qualify with a credit score of 620 or more.
  • The 3-2-1 program offers a mortgage at an un-advertised rate (meaning home buyers must inquire with a loan officer to find out the current rate) with a 3% down payment.
  • Other incentives include a $1,500 grant toward closing and a $2,000 Home Depot gift card.

How it works

  • Home buyers must take out a loan with Guild Mortgage. 
  • PMI may be required.
  • Because interest rates could be at market rate or higher, low-income home buyers may be better off obtaining financing through an FHA loan, Oregon Bond or another program offering locked-in low interest rates.
  • Paying less up front may mean paying more in the long run.
  • Read more at TheTruthAboutMortgage .

Unison HomeBuyer

About the program

  • It’s a “co-investment” with a San Francisco startup called Unison, so there are no eligibility requirements or location restrictions.
  • Unison will partner with home buyers to contribute up to half the downpayment on the home.
  • Warning – home buyers pay Unison back when they sell the home, plus something around 40% of the home value gained since the time of purchase (some scenarios may entail a much higher or lower percentage).
  • Home buyers also pay Unison a 2.5% origination fee, along with normal closing costs associated with buying the home.
  • Buyers can avoid paying PMI, and because partnering with Unison is not considered debt, buyers can also improve their debt-to-income ratio.

How it works

  • Home buyers must take out a mortgage through one of Unison’s partner lenders.
  • If the home gains significantly in value, the amount owed to Unison could be much greater than the amount saved by not paying PMI.
  • Since Portland real estate values are going up, not down, over time (long-term trend), investing with Unison might not be the best option for home buyers in this area.

Confused yet? Our top 1% Portland area buyer’s agent can help you understand the options, and refer you to one of our trusted mortgage lenders. Let us guide you into the right loan and the right home! It’s what we do. Contact us today.

July 12, 2019
AUTHOR

Stephen FitzMaurice

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. We work from Salem, Oregon to Vancouver, Washington and beyond. Check out our full services areas on the top menu.