Are you thinking about making the jump between renting an apartment and owning a home? As a first-time home buyer, you have access to more loan and assistance options that can help make the dream of homeownership easier.
Let’s take a look at some of the different loan types and down payment assistance programs you might qualify for as a first time buyer in Oregon.
First Time Home Buyer Programs in Oregon
First-time home buyer programs vary by state. In Oregon, first-time buyer assistance is issued by department of Oregon Housing and Community Services (OHCS). OHCS offers 2 unique loan options for buyers who haven’t owned a home in the last 3 years: a Rate Advantage loan or a Cash Advantage loan. You may also qualify for these programs if you aren’t a first-time buyer but you live in an area targeted for revitalization.
You can learn more about targeted areas by checking out OHCS’s targeted and non-targeted on the Oregon.gov website. You may also qualify for a down payment assistance grant.
Let’s take a closer look at both of these first-time home buyer programs in Oregon, who qualifies and how they can help you become a homeowner sooner.
Oregon Rate Advantage Home Loan
With an Oregon Rate Advantage loan, you can secure a government-backed or conventional mortgage loan with a more competitive APR. These loans all have fixed rates, and you’ll be able to find a lower interest rate than you would find on an outside loan with the same terms. If you choose a conventional mortgage, you must have at least 20% down to qualify for an Oregon Rate Advantage loan. Standard down payment requirements apply for government-backed loans.
To qualify for this loan, you must meet income requirements. The maximum income you can earn and still qualify for a Rate Advantage loan varies by county and the number of members you have in your household. You can read more about income limits by reading the OHCS’s income limit brief here.
You must also be a resident of Oregon, plan to occupy your new home as your primary residence, and you may not have had a bankruptcy close on your record in the last 2 years. You may also not have a foreclosure on your record within the last 5 years.
You can use a Rate Advantage loan to buy a traditional home or a manufactured home (sometimes called a mobile home or trailer). If you buy a manufactured home, your home must have a manufacturer’s date after June 14, 1976. Your manufactured home must also have a total area of at least 400 square feet.
Purchase price limits also apply to your mortgage loan. These limitations can vary by county. The maximum purchase price for a Rate Advantage loan might be as low as $283,349 or as high as $522,454 depending on your home’s location. You can view purchase price limits here.
Oregon Cash Advantage Home Loan
With an Oregon Cash Advantage loan, you’ll accept a slightly higher APR on your home loan. However, you may also receive up to 3% of your loan value in cash assistance. You can use this cash to help cover your down payment or closing costs. The income, property price, foreclosure and bankruptcy requirements are the same for an Oregon Rate Advantage loan.
Oregon Housing Down Payment Assistance
The Oregon Housing Down Payment Assistance Program can help low-income home buyers invest in their first property and receive up to $15,000 in down payment assistance. To qualify, you must meet income limitations that vary by county and complete a home buyer’s education course.
Best National First Time Home Buyer Programs
In addition to state-specific first time buyer programs, you can also use a federal loan option to buy a home with less strict requirements. Government-backed mortgage loans have insurance from the federal government. This makes them less risky for lenders, which allows lenders to offer more loans to those who may not otherwise qualify.
There are currently 3 types of government-backed mortgage loans available in Oregon: FHA loans, VA loans and USDA loans. Let’s take a closer look at what you’ll need to qualify for each type of loan.
FHA loans are government-backed loans that have insurance from the Federal Housing Administration. An FHA loan can help you buy a home with looser financial requirements than conventional mortgage loans. You can get an FHA loan with a lower credit score, less money down and with financial missteps on your credit report (like a bankruptcy). You may also roll your closing costs into the balance of your loan.
To qualify for an FHA loan, you must have a credit score of at least 580 points and a down payment of at least 3.5% of your loan’s balance. If you have at least 10% to put down, you may also qualify for an FHA loan with a credit score as low as 500 points.
The home you want to buy must also meet a number of requirements to qualify for an FHA loan. To secure your loan, all of the following must be true:
- You plan to live in the home you’re buying as your primary residence. That means that you’ll spend most of the year in it.
- The home you buy must be appraised and approved by an FHA-approved appraiser. The appraiser must confirm that the home is in livable condition.
- You must plan to move into your new home within 60 days of closing on your loan.
If you and your home meet these standards, an FHA loan can help you buy a home without the high credit and debt requirements of a conventional loan.
Best National FHA Lender: Rocket Mortgage® by Quicken Loans®
Rocket Mortgage® by Quicken Loans® offers one of the easiest and most convenient ways for first time buyers to apply for a mortgage online. Rocket Mortgage® has streamlined the loan application process down to only the most necessary steps.
Its intuitive approach to lending saves you more time — many buyers will receive an approval instantly. With an easy application process and plenty of term options, Rocket Mortgage® is our top choice for buyers considering an FHA loan.
VA loans are government-backed loans insured by the Administration of Veterans Affairs. VA loans are special loans issued only to veterans, active members of the military and some select surviving spouses. With a VA loan, you can buy a home with 0% down and a credit score as low as 620 points.
To qualify for a VA loan, you must meet service requirements. You must meet at least 1 of the following criteria to qualify:
- Served 181 days of active service during peacetime
- Served 90 consecutive days of active service during wartime
- Served more than 6 years of service with the National Guard or Reserves
- Are the spouse of a servicemember who lost their life in the line of duty or as the result of a service-connected disability or injury
To prove that you qualify for a VA loan, you must submit a Certificate of Eligibility (COE) to your mortgage lender when you apply for your loan. You can get your COE through the VA by demonstrating proof of your service. The proof you’ll need will vary depending on your type of service. Your lender may be able to help you secure your COE.
Best National VA Lender: Veterans United
Veterans United specializes in offering VA loans and refinances. Veterans United employs a full team of former servicemembers from each branch of the armed forces — so you know you’re getting personalized advice from someone who’s gone through the VA loan process themselves.
Veterans United can help you determine if you qualify for a VA loan and help you get your COE. If you’re looking for top-notch customer service and plenty of assistance securing your loan, be sure to consider Veterans United.
USDA loans have insurance from the U.S. Department of Agriculture. With a USDA loan, you can buy a home with 0% down and a credit score as low as 640 points. However, USDA loans have stricter income and home location requirements than VA and FHA loans.
To qualify for a USDA loan, your home must be located in a rural or suburban area. To learn if your home qualifies for a USDA loan, search for your address on the USDA’s eligibility site. You must also meet income requirements, which vary depending on your ZIP code. Like an FHA loan, your home must also meet minimum USDA standards and be in livable condition before you move in. Your property also cannot be a working farm.
Condo loans can be complicated as they involve the homeowners’ association, potential approval from a co-op, insurance, condo fees and more. Additionally, condo loans may be compromised by steep initial payouts for insurance, fees, etc. Banks even charge higher interest rates because condominiums are deemed riskier than single-family homes. As a result, you want to find a lender that helps mitigate many of these issues.
Find the Loan That’s Right for You
No matter if you’re looking for a loan with a low credit requirement or a special loan for self employed individuals that takes nontraditional income and assets into account, finding the right loan for you is all about research.
Don’t be afraid to spend time comparing a few local lenders regarding current APRs, loan types and term benefits. A mortgage loan can be a 30-year long commitment — so make sure that you take the time to choose a lender that works for you.
Frequently Asked Questions
What credit score do you need to qualify as a first-time homebuyer in Oregon?
You should have a credit score of at least 620.
What are the benefits of FHA loans?
FHA loans offer low down payments and a credit score of 500 to qualify.
Related content: Best Oregon Home Insurance
Get Ready for Take Off
Rocket Mortgage® is an online mortgage experience developed by the firm formerly known as Quicken Loans®, America’s largest mortgage lender. Rocket Mortgage® makes it easy to get a mortgage — you just tell the company about yourself, your home, your finances and Rocket Mortgage® gives you real interest rates and numbers. You can use Rocket Mortgage® to get approved, ask questions about your mortgage, manage your payments and more.
You can work at your own pace and someone is always there to answer your questions — 24 hours a day, 7 days a week. Want a fast, convenient way to get a mortgage? Give Rocket Mortgage® a try.
About Sarah Horvath
Sarah is an expert in the insurance, investing for retirement and cryptocurrency space.