Mississippi First-Time Homebuyer Programs
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Looking into buying a home for the first time? This can be a stressful process, and the upfront costs are often high.
Fortunately, state and federal government programs exist to help first-time buyers achieve their dream of homeownership. Each state, however, has its own programs and eligibility requirements for potential buyers.
In January 2019, we researched first-time homebuyer programs in Mississippi, which included reviewing programs offered through the Mississippi Home Corporation. Here’s what first-time homebuyers in Mississippi need to know.
In this guide, we will cover:
- Eligibility for Mississippi assistance
- Smart Solution
- Mortgage Revenue Bond 7
- Mortgage credit certificate (MCC)
- Housing Assistance for Teachers (HAT)
- National first-time homebuyer programs
Mississippi first-time homebuyer programs
Mississippi hosts a number of programs that first-time homebuyers can take advantage of. Included are programs offered through the Mississippi Home Corporation, which include Smart Solution, MRB7, the mortgage credit certificate and Housing Assistance for Teachers. Below is a breakdown of each of these programs, their features and eligibility requirements for first-time buyers.
Eligibility for Mississippi assistance
Each first-time buying program in Mississippi has a specific set of qualification requirements. Every program will take an applicant’s income and credit score into account when evaluating requests for assistance. The state works with lenders that will guide first-time buyers through the process to help determine which programs they qualify for.
You can check current mortgage rates for Mississippi here.
- Low mortgage insurance
- Low mortgage rates
- Tax credits
- When combined with the mortgage credit certificate, qualifying first-time buyers have the option to claim 40% of their mortgage on federal income taxes. Credit is available up to $2,000 per year.
- Buyers may still claim 60% interest as a deduction.
- 97% conventional loan
- Available statewide
- Applicant must be a legal resident of the U.S.
- Minimum credit score of 620 for FHA, VA, USDA and conventional loans
- Household income maximum of $95,000
- Homebuyer education course, offered in person or online
- New or existing home must be located in Mississippi
- Property must be applicant’s primary residence
- Property must be a single-family home, condominium, townhouse or duplex
- Manufactured homes may also be covered using financing through FHA
- Participating lenders may also check debt-to-income ratio and outgoing monthly payments for items such as alimony and child support, credit card payments, car payments, etc.
How it works
The program provides potential homeowners financial assistance by providing low interest rates and cash advances. First-time homebuyers should get in touch with participating lenders to explore whether they qualify for the program. Resources are available here – Homebuyers should be aware that not all lenders in Mississippi participate in this program, so it’s important to check this list first.
Mortgage Revenue Bond 7
- Down payment and closing cost assistance, up to $7,000
- Fannie Mae and Freddie Mac loans available, as well as VA and USDA Rural Development
- 30-year, fixed mortgage rates
- No maximum on liquid assets for borrowers
- Tax credits
- Mortgages are made competitive through mortgage revenue bond sales
- These are exempt from federal taxes
- 10-year, deferred second mortgage available, which may be applied to borrower’s contribution, up to $7,000 and can cover:
- Down payments
- Attorney fees
- Origination fees
- Survey and inspection fees
- Title fees
- Credit report fees
- Amortization fees
- Flood certification
- Upfront VA funding, Rural Development, PMI and MIP fees
- If borrower has any funds remaining after paying for above costs, the difference can be applied as a reduction once the loan has been approved and closed
- Must be a first-time homebuyer or a buyer who has not owned a home in at least three years. Veterans and buyers in target areas are exempt from the first-time homebuyer rule. Target areas are defined by the state government as those that have experienced economic distress. These target areas can be found through the state of Mississippi website.
- Credit score
- Must meet requirements created by federal programs, including Fannie Mae and Freddie Mac, FHA, USDA Rural Development and VA
- Income requirements established through county in which property is located
- Must be legal resident of the U.S.
- Homebuyer education course
- Available in person or online
- Rates and income limits determined by location within Mississippi
- Those in target areas may receive additional benefits
- Purchase limit for target areas: $289,705
- Purchase limit for non-target areas: $237,031
- Must be located in the state of Mississippi
- Home may be new or existing
- If applying for assistance to purchase a manufactured home, the home must be permanently attached to land
- Property in question must be a single-family home, condominium or townhouse
- Property must be occupied by the owner and be applicant’s primary residence
How it works
MRB7 helps first-time homebuyers by granting borrowers competitive mortgage rates and providing tax exemption and other benefits. First-time homebuyers can begin the process of utilizing the MRB7 program by getting in touch with participating lenders. Not all lenders participate in this program, so it’s important to search for a lender through the Mississippi Home Corporation.
Mortgage credit certificate (MCC)
- Reduces federal income tax for borrowers
- This allows borrowers more access to their own cash reserves
- By reducing taxes paid, buyers have a greater chance of qualifying and being able to pay for a mortgage
- Borrowers may utilize a tax credit up to 40% of yearly interest paid against mortgage costs
- Remaining 60% of mortgage interest will still be eligible to be itemized as a tax deduction each year
- The MCC program can be used in conjunction with conventional loans, Fannie Mae products, FHA, RD and VA programs, Smart Solution and other programs available through the Mississippi Home Corporation
- Can be used for fixed-rate or adjustable-rate mortgages
- Guidelines and restrictions will be determined based on which of the above loans are used
- Must be a first-time homebuyer or buyer who has not owned a residential property in the last three years
- Income limits vary according to number of members in a household and property location
- Owner must live in home as primary residence
- Home must be a single-family property
- If a manufactured home, the residence must be approved by HUD
- Applicant must provide:
- $300 non-refundable program fee
- Federal income tax returns for previous three years
- Sales contract for property
- Other documents requested by individual lenders
- Cost of home must not exceed maximum purchase cost determined by county
- To apply for immediate MCC benefits:
- Applicant must submit to their employer a revised W-4 form
- W-4 should show increased take-home pay
- W-4 should lower annual tax contribution
- Alternately, applicants can take the benefit on an annual basis when filing federal taxes
How it works
Housing Assistance for Teachers (HAT)
- Financial benefits for teachers located in areas deemed to have critical teacher shortages
- 97% loan-to-value maximum
- 25- or 30-year, fixed loan rate
- Down payment assistance
- Borrowers required to make a contribution of at least 1%
- Closing cost assistance
- Up to $6,000
- Can cover prepaid closing costs, private mortgage insurance and other prepaid expenses
- No income limit
- Exceptions if HAT is being used in conjunction with other Mississippi Home Corporation programs
- Grant assistance will be forgiven if:
- Applicant completes and satisfies the loan agreement, which mandates borrowers to be employed as a teacher for no fewer than three years in a qualifying school district
- Must be a licensed teacher in the state of Mississippi
- 25- or 30-year, fixed loan rate
- Available for Fannie Mae conventional loan products
- Home must be located within specific counties
- Must meet credit score requirements
- Credit score requirements based on application’s loan-to-value rate
- Borrowers must supply a down payment of at least 1%
- These funds must come from borrower’s personal financial reserves
- 1% down payment may not be gifted from a relative or alternate source
- While other funds may be gifted by a relative, this 1% down payment must come from the applicant’s own funds
How it works
Licensed teachers in Mississippi should begin exploring the Housing Assistance for Teachers program by first finding out whether they teach in a qualifying school district. From there, they can contact lenders to begin the homebuying process.
National first-time homebuyer programs
In addition to the above state-run programs, first-time homebuyers in the state of Mississippi also have access to national homebuyer programs. Agencies offering such assistance include the FHA, Fannie Mae and Freddie Mac, the USDA and the VA. Explore the LendingTree guide to first-time homebuyer programs to find out more.