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2022 Alaska First-Time Homebuyer Programs

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The state of Alaska has numerous programs designed to help first-time buyers achieve their dream of homeownership. Programs include low-interest mortgages, down payment assistance and other initiatives. To qualify for first-time homebuyer programs in Alaska, borrowers must meet income, residency and credit requirements.

Alaska statewide and local first-time homebuyer programs

Alaska Housing Finance Corporation (AHFC), also known as Alaska Housing, offers first-time homebuyer programs across the state. Additionally, regional housing authorities, local governments and community organizations provide aid at the borough and city levels. Below is an overview of statewide initiatives. Contact the Alaska office of the U.S. Department of Housing and Urban Development (HUD) for additional programs in your area.

Program nameAssistance amountAssistance typeWhere it’s available
First HomeNo purchase price limitsLow-interest-rate loanStatewide
First Home LimitedUp to $477,211 purchase price for a single-family home, depending on areaLow-interest-rate loanStatewide
AHFC Closing Cost Assistance3% or 4% of the initial loan amount for down payment and closing costsLow-interest-rate loan combined with down payment/closing cost assistanceStatewide
Affordable Housing Enhanced Loan program (AHELP)Amount varies based on the type of assistanceGrant, deferred- payment second mortgage or forgivable second mortgageStatewide (program details vary by borough and city)

What to know about different types of down payment assistance

Down payment assistance (DPA) comes in various forms among Alaska’s first-time homebuyer programs. For example, the North Pacific Rim Housing Authority’s DPA program is a forgivable grant of up to $40,000 or 20% of the cost of the home. And borrowers must live in the house for 15 years to receive forgiveness. On the other hand, Cook Inlet Lending Center’s program is a second 30-year fixed-interest-rate mortgage of up to $60,000, with no stipulations for remaining in the home.

Applicants should understand the requirements and type of assistance offered by a particular program.

  • Second mortgage: Borrowers will have a second loan in addition to their first mortgage. The second mortgage may be forgivable, deferred or have traditional payments, depending on the program.
  • Grants: Grants are typically available to low- and moderate-income borrowers. Homebuyers do not need to repay grants; however, they may be required to remain in the home for a set time.

How Alaska first-time homebuyer programs work

Applicants interested in one of Alaska’s first-time homebuyer programs should prepare to take the following steps.

1. Review your options. Familiarize yourself with the various programs and the income and purchase price restrictions for each.

2. Schedule a homebuyer education class. Applicants to most first-time homebuyer programs in Alaska must attend a free HomeChoice or Finally Home homebuyer education course. Attendees receive a certificate of completion, which is good for $250 off the Alaska Housing loan commitment fee.

3. Select a lender. Compare lenders and program offerings. Borrowers applying to one of Alaska Housing’s programs must use an approved lender.

4. Get prequalified. Once you decide on a lender, you’ll submit the required documents and information for a prequalification appointment.

5. Apply to local programs. If you’re interested in a local program in addition to a statewide program, you’ll apply to it directly. Some programs require that you prequalify for an Alaska Housing loan first.

6. Be aware of program requirements. Make sure you know of any program stipulations you must follow after closing. For example, you may need to remain in the home or avoid refinancing your loan for a set time. Borrowers who don’t adhere to the requirements may have to repay some of the assistance.

Alaska first-time homebuyer program requirements

Some first-time homebuyer programs establish general requirements for applicants, including minimum credit scores and maximum debt-to-income (DTI) ratios. However, borrowers must meet specific criteria depending on their lender and loan. Additionally, local and regional programs will have residency requirements and other guidelines.

Program name Credit score minimumDTI ratio maximumMaximum income limitHow long you have to live in home
First HomeAs per lender requirementsAs per lender requirementsNo income limitsN/A
First Home LimitedAs per lender requirementsAs per lender requirements$93,900 to $157,920, (depending on location and family size)9 years to avoid potential recapture tax
AHFC Closing Cost Assistance640As per lender requirementsNo income limitsN/A
Affordable Housing Enhanced Loan program (AHELP)As per program requirementsAs per program requirementsAs per program requirementsAs per program requirements

THINGS YOU SHOULD KNOW

Many down payment and closing cost assistance programs are subject to federal income limits. Established by the U.S. Department of Housing and Urban Development (HUD), the limits are based on the median income for the area in which you’re buying a home. Knowing your area’s limits will give you an idea of what programs you qualify for. To find current Alaska income limits where you live, enter your borough or city in HUD’s income limit database.

National first-time homebuyer programs

Many of Alaska’s first-time homebuyer programs combine down payment assistance with a first mortgage or require an applicant to prequalify for a loan from another source.

In most cases, the first mortgage is a nationally available loan. These mortgages are not necessarily limited to first-time buyers, but they have favorable terms and requirements that appeal to new homeowners.

Conventional loans. Non-government or conventional loans usually have stricter eligibility requirements. But a few conventional loan programs are designed to make homeownership more accessible. Fannie Mae’s HomeReady and Freddie Mac’s Home Possible programs offer a minimum down payment of 3% and flexible eligibility requirements for low- and moderate-income borrowers. HomeOne, guaranteed by Freddie Mac, has a 3% minimum down payment and is open to all first-time buyers, regardless of income.

FHA loans. Borrowers with less-than-perfect credit can purchase a home with an FHA loan. These mortgages are guaranteed by the Federal Housing Administration (FHA) and offer a low minimum down payment of 3.5%. Borrowers can qualify for an FHA loan with a credit score as low as 580, or as low as 500 if they put 10% down.

VA loans. With a loan guaranteed by the U.S. Department of Veterans Affairs (VA), military personnel and eligible spouses can purchase a home with no money down and flexible credit requirements. VA loans don’t require mortgage insurance, but borrowers pay an upfront funding fee.

USDA loans. Low- and moderate-income borrowers looking to live in designated rural areas may qualify for USDA loans. These mortgages, guaranteed by the U.S. Department of Agriculture (USDA), require no down payment.

Section 184 Indian Home Loan Program. With this HUD program, eligible borrowers can get a low-rate mortgage with flexible credit requirements and down payment minimums of 1.25% or 2.25%, depending on the loan amount. This program is available to American Indian and Alaska Native families, Alaska villages, tribes or tribally designated housing entities.

Alaska first-time homebuyer program benefits

Under the umbrella of Alaska Housing’s First Home and First Home Limited programs, applicants have access to interest rate reductions they can combine with a nationally available loan.

Interest Rate Reduction for Low-Income Borrowers (IRRLIB). Homebuyers whose income falls within the program limits receive an interest rate reduction of 0.5% or 1% off the first $180,000 of the loan. Current program limits range from $41,900 to $79,900, depending on family size and location.

Energy Efficiency Rate Reduction. Borrowers purchasing an energy-efficient home can receive an interest rate reduction.

State Veterans Interest Rate Preference. Qualified veterans receive a 1% interest rate reduction on the first $50,000 of the loan.

FAQs about Alaska’s first-time homebuyer programs

Who qualifies as a first-time homebuyer in Alaska?

For most programs, the term first-time homebuyer refers to anyone who hasn’t owned a home in the past three years.

Can I qualify for down payment assistance in Alaska?

To qualify for down payment assistance, you’ll need to meet the income, credit and/or purchase price requirements of the program you’re applying to. Some programs have additional stipulations, such as how long you need to live in the home. And down payment assistance programs are typically limited to the availability of funds.

How much of a down payment do I need to buy a house in Alaska?

Your down payment will depend on the loan you apply for. In Alaska, you can purchase a home with no down payment using a VA or USDA loan. Other mortgages have low down payment requirements. For example, FHA loans require a 3.5% down payment, and some conventional loan programs offer 3% down payments. Additionally, borrowers can combine a down payment assistance program with a loan for 100% financing.

Home price trends in Alaska’s major areas

In 2021, Alaska home prices rose — as they did across the country. According to data from the National Association of Realtors, from the second quarter of 2020 to the second quarter of 2021, the median home price increased 5.4% year over year in Anchorage to $342,298. The typical 30-year mortgage payment there increased by about $30 to $1,299 per month. And in Juneau, the median home price rose by 4.9% to $375,032. The typical mortgage payment there went up slightly, by $26, to $1,423.

 

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