Missouri First-Time Homebuyer Programs

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Intro

If you’re looking to buy your first home in Missouri, there may be a financial assistance program that can help. The Midwestern state offers several programs geared toward first-time homebuyers who need help paying for their home, providing assistance with anything from down payments to monthly mortgage installments.

Missouri also offers its residents with educational classes and counseling services, which can aid new homebuyers with the entire buying process, along with other aspects of owning a home, such as refinancing and foreclosures.

Missouri first-time homebuyer programs

Two agencies in Missouri offer first-time homebuyer programs: Community Action Agency of St. Louis County, or CAASTLC, has been providing financial assistance to homebuyers for 50 years, mainly for people with low income; the Missouri Housing Development Commission, or MHDC, has been helping residents of all backgrounds with affordable housing since 1969.

Eligibility for Missouri assistance

The homebuyer assistance programs offered in Missouri have varied requirements. Most will usually want to know a homebuyer’s credit score and income level to determine if they qualify. Some programs also may require first-time homebuyers to take an education course. Find out more about each program and the requirements below.

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Individual Development Account (IDA)

The CAASTLC offers an Individual Development Account, or IDA, to provide homebuyers with down payment assistance through opening a new, matched savings account. Each $1 that a homebuyer deposits in his or her account will be matched with either $1 or $2, depending on each case.

Features

    Down-payment assistance

  • Deferred loan with 0% interest — but depends on location (some include St. Charles and St. Louis counties, and the city of O’Fallon)
  • Forgivable loan after five years — only for the city of Florissant
  • “Financial fitness” program, which includes counseling services and classes

Eligibility

  • Complete homebuyer education and counseling
  • Homebuyer needs at least $1,000 of own money
  • Income limits: cannot be more than 200% of federal poverty level, for example, no more than $24,120 for a single person, based on 2016-2017 guidelines, the most recent available.
  • Must have fixed-rate mortgage
  • Deposit $10 or more each month into savings
  • Stay in program no less than six months

How it works

To learn more about this the IDA program or to see if you might be eligible, you’ll need to call the CAASTLC directly.

Missouri Housing Development Commission (MHDC)

The MHDC has several homebuying programs that may be able to provide financial assistance. Each program is outlined below, but you can find more on the housing commission’s website or by speaking with a representative at the MHDC.

First Place Loan Program

The First Place Loan Program provides two types of mortgage loans, a Cash Assistance Loan or a Non-Cash Assistance Loan for new homebuyers. The Cash Assistance Loan helps pay for the down payment and closing costs with a second mortgage, which can be forgiven after 10 years of residency.

Income limits vary, depending on the property’s location. For example, in Jefferson City’s non-“Targeted Areas,” income cannot be more than $71,500 for a one- to two-person household, or $82,225 for a household of three or more. In a Jefferson City Targeted Area — one with lower income and employment levels or that’s been designated an area of chronic economic distress (but can have higher purchase prices and income limits) — a one- to two-person household cannot have an income of more than $85,800, and those living with three or more max out at $100,100. These areas also don’t require you to be a first-time buyer. Purchase-price limits for a single-family home throughout the state are $271,164 (non-Targeted) and $331,423 (Targeted).

The Non-Cash Loan does not offer down-payment assistance or help with closing costs, but it can offer lower rates than the Cash Assistance Loan. There are also purchase-price limits, including $248,098 for a single-family home in a non-Targeted Area and $303,231 in a similar home but one located in a Targeted Area. Income limits are the same as with the Cash Assistance Loan.

Mortgage Credit Certificate (MCC)

First-time homebuyers may be eligible for a federal tax credit when they apply for a Mortgage Credit Certificate, or MCC, helping to lower the amount of federal income tax they owe each year. An eligible homebuyer can get a tax credit of 25% of the loan’s interest that is paid annually but cannot be more than $2,000 each year.

A person’s income will be taken into consideration in order to be eligible for the MCC, along with the purchase price of the home. The property must be used as a primary residence and a homebuyer cannot have owned another home in the last three years.

Military veterans

Military veterans can apply for either a First Place Loan or MCC without being a first-time buyer. A variety of loans are offered to veterans, including through the U.S. Department of Veterans Affairs (VA) or Federal Housing Administration (FHA). Income and credit will be the main factors to qualify, and a veteran must apply for a program 25 years or fewer since being on active duty.

How it works:

To apply for any of the programs listed above as a veteran, you can either find a participating lender on the MHDC’s website and contact it directly, or you can complete a form online to pre-qualify. However, if you choose to complete the form online, keep in mind this is only to see whether you are eligible for this particular program. If you are, you will then need to contact a lender to determine your eligibility for a loan with their company.

Next Step Program

The Next Step Program allows all homebuyers, new or existing, who lack sufficient equity or funds for down payment to purchase a new home with potentially lower rates when buying in an “opportunity area.” These areas are determined by the census tract, and usually have less poverty and higher household income levels. Several loan options are available, such as the MHDC’s own 30-year fixed-rate First Place Loan, along with conventional loans, FHA, VA and U.S. Department of Agriculture (USDA) Rural Development. Income limits for homebuyers vary depending on the area. For example, Kansas City has a maximum of $96,000 for one- to two-member families and $112,000 for households of three or more. Purchase-price limits max out at $331,423 for a single-family home found throughout the state.

To see if you qualify for the Next Step Program, you will need to either find a lender online and contact it directly or reach out to the agency for more information.

National first-time homebuyer programs

Missouri has many program options that may be able help buy your first home, but there are also nationwide programs to consider. The USDA Rural Development division assists lower-income residents wanting to buy a home in a defined rural area, while the Department of Housing and Urban Development (HUD) Housing Choice Voucher Program targets those with very low income or homebuyers with a disability who need financial assistance. Other programs can include Habitat for Humanity, the FHA and the VA. To learn more, this general guide to first-time homebuyer programs by LendingTree, which owns MagnifyMoney.

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Carissa Chesanek
Carissa Chesanek |

Carissa Chesanek is a writer at MagnifyMoney. You can email Carissa here

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