2022 Mississippi First-Time Homebuyer Programs
Mississippi offers first-time homebuyer programs to help qualified individuals and families with closing costs and down payment assistance. To be eligible for these programs, you will need to meet specific requirements, including where you can buy, how long you will need to live in your home and salary restrictions. Learn more about how these state-run programs work in order to put down roots in the Magnolia State.
Mississippi and local first-time homebuyer programs
The Mississippi Home Corporation (MHC) offers multiple programs via participating lenders that first-time homebuyers can take advantage of. These programs include a tax credit, a forgivable second mortgage and a special program for teachers to bring teaching professionals into rural Mississippi. Each program has its own requirements and assistance. Below is a snapshot of the programs.
| Program name | Assistance amount | Assistance type | Where it’s available |
|---|---|---|---|
| MHC Smart Solution Mortgage (Combined first and second mortgage – must take out the Smart Solution first mortgage to take advantage of the second mortgage program) | Varies (up to 4.5% of the purchase price for down payment and closing costs) | Low-interest rates and cash advance or second mortgage | All counties are eligible but depends on the lender |
| MHC Mortgage Revenue Bond 7 (MRB-7) | $7,000 for down payment and other upfront costs | Competitive mortgage rates, plus a forgivable (after 10 years) second mortgage with 0% interest | All counties are eligible but depends on the lender |
| MHC Mortgage Credit Certificate | tax credit equal to 40% of the annual interest paid on the mortgage loan | Tax credit | All counties are eligible but depends on the lender |
| MHC Housing Assistance for Teachers | Up to $6,000 | Grant | 67 counties in Mississippi |
What to know about different types of down payment assistance
Most first-time homebuyer programs make mortgages affordable by offering down payment and closing cost assistance in the form of a grant or a forgivable mortgage. In Mississippi, one program includes a tax credit. While a forgivable mortgage may appear to be free, there are specific guidelines you need to follow, or you will have to pay the money back.
Here’s how each type of down payment assistance works.
- Forgivable second mortgage. If you secure a forgivable second mortgage, you are usually required to remain in your home for a set number of years. These loans do not require repayment or accrue interest. However, if you move or refinance before your time on the loan is up, you will forfeit the forgiveness and be responsible for paying the loan back to the lender.
- Grant. If you are given a housing grant, you are simply awarded cash rather than having a lien (as with a second mortgage) on your house. Some housing grants, like forgivable loans, come with a requirement that you remain in the home for a specific number of years. If you break the agreement, you may have to repay the grant.
How Mississippi first-time homebuyer programs work
First-time homebuyers not only have access to these Mississippi programs, but they can be combined with an FHA, VA, and USDA home loan to further lower mortgage costs as well.
There may be other opportunities provided by local county governments as well, offered throughout the year. It’s worth reaching out to local housing nonprofits and housing authorities to learn about new opportunities. If you are hoping to settle down in Mississippi using housing assistance to purchase your first home, heed these basic steps.
- GET A MORTGAGE APPROVAL FROM A PROGRAM-APPROVED LENDER.The Mississippi Housing Corporation provides a link with a list of approved lenders to choose from for each program. The lenders vary depending on the program, but if you start out with a Smart Solution mortgage, you may be able to tack on other assistance, depending on your circumstances.
- COMPLETE YOUR HOMEBUYER EDUCATION REQUIREMENTS.All of MHC’s first-time homebuyer programs require homebuyer education. This requirement is to help you understand all the challenges and rewards of homeownership.
- LEARN THE INCOME LIMITS.First-time homebuyer programs exist to help low- to moderate-income earners buy into the housing market. Make sure to carefully read the details of your program to learn if you qualify for assistance.
- KNOW THE PAYBACK REQUIREMENTS BEFORE YOU SELL OR REFINANCE.When you accept assistance from a first-time homebuyer program, chances are you will be required to stay put in your home for a particular number of years. If you leave early, you will most likely be expected to pay all or some of the money back. In addition, you will have to repay the assistance if you refinance your loan in the same time frame.
- EXPECT HIGHER CREDIT SCORE REQUIREMENTS.Some of these programs call for 640 or above for a credit score. Make sure to get your credit in order before you apply for one of these programs, as this score may be higher than conventional mortgages.
Mississippi first-time homebuyer program requirements
If you are a first-time house hunter in Mississippi, make sure you know the basic eligibility requirements for its state-run programs, including minimum credit score and income requirements. For example, in the case of the Mississippi Employer-Assisted Housing Teacher program, you are required to commit to teaching in the state for a specific number of years.
The table below outlines the different program requirements to help you figure out your best fit.
| Program name | Credit score minimum | DTI ratio maximum | Maximum income limit | How long you have to live in home |
|---|---|---|---|---|
| MHC Smart Solution Mortgage (combined first and second mortgage program) | 640 | Depends on the lender | $95,000 | 10-year term if using the Smart Solution Second loan |
| MHC Mortgage Revenue Bond 7 (MRB7) | Depends on lender | Depends on lender | Depends on the county and household size, from $60,000 to $103,460 | 10 years |
| MHC Mortgage Credit Certificate | N/A | N/A | Depends on the mortgage loan | N/A |
| MHC Housing Assistance for Teachers (HAT) | Depends on the mortgage loan used | Depends on the lender | Depends on the mortgage loan | N/A, but must complete three years of employment in critical shortage area |
THINGS YOU SHOULD KNOW
If you are buying a home in Mississippi, it’s important to know while many of the down payment assistance programs are available statewide (except for the HAT program), you can only use specific lenders for many of them. It’s also important to know the median income limits for the programs that require them. You can check the current Mississippi income limits by visiting the HUD website and entering your state and county information.
National first-time homebuyer programs
Most first-time homebuyer programs in Mississippi require you to be approved for a mortgage from a recommended lender. While the MHC grants and forgivable loans will help pay for the closing costs and down payments, it is necessary to find an affordable mortgage loan to use them. While you can use a conventional mortgage, if you are concerned about qualifying for or affording one, several national programs are available to help low- to moderate-income homebuyers.
Note: Not all loans listed below are exclusive to first-time borrowers, although many use them.
→ Conventional loans. Low- to-moderate income families may have a hard time affording a conventional mortgage. These loans aren’t backed by the federal government and have strict requirements and higher loan limits than government programs. Examples of conventional first time homebuyer loans include the Fannie Mae HomeReady® and Freddie Mac Home Possible® programs.
→ FHA loans. Many first-time homebuyers utilize FHA loans because of their lower credit score requirements (580) and lower down payment requirements (3.5%). Note you will be required to pay two types of FHA mortgage insurance on the loans. These loans allow buyers to have a lower credit score, but you will need at least a 640 credit score to qualify for many Mississippi loans. It’s worth noting that in Mississippi, the FHA loan limit for a single-family home (in all counties) goes up to $420,680.
→ VA loans. The U.S. Department of Veterans Affairs (VA) guarantees VA loans for veterans and those serving in the armed forces. These loans do not require a down payment, do not require mortgage insurance, and there are no loan limits. If you qualify for a Mississippi housing assistance program, you could use the funds to pay for closing costs, fees or other house-related expenses.
→ USDA loans. If you plan to settle down in rural Mississippi and have a low- to-moderate income, you should look into a USDA loan. These mortgages provide 100% financing if you purchase in a USDA-designated area.
FAQs about Mississippi first-time homebuyer programs
Who qualifies as a first-time homebuyer in Mississippi?
Like the Federal Housing Authority, most Mississippi programs, you’re considered a first-time homebuyer if you haven’t owned a home in the past three years. However, some grants and forgivable loans may have different rules, like the HAT program, so if you are buying your second home or have questions regarding your status, it’s wise to reach out to the program administrators to ask about eligibility.
Can I qualify for down payment assistance in Mississippi?
As long as you meet the income, credit and in the case of HAT, the professional requirements and are willing to enroll in a homebuyer education course, you could qualify for housing assistance in Mississippi.
How much of a down payment do I need to buy a house in Mississippi?
It depends on the mortgage product. If you’re eligible for a USDA or VA loan, you won’t need to worry about providing a down payment. The minimum FHA down payment requirement is 3.5%, but if you take out a Smart Solution Second mortgage, you may be able to cover the down payment with the loan.
Home price trends in Mississippi major areas
Home costs vary widely in Mississippi depending on the county. For example, in Rankin County (home to state capital, Jackson), median home prices were up 14.9% year-over-year in the fourth quarter of 2021, to $199,691 according to data from the National Association of Realtors. The average monthly mortgage payment in Rankin County rose $121 to $765. In Harrison County, home of Gulfport (the second-largest city in Mississippi), the median home price rose 13.8% year-over-year to $199,462. This translates to a monthly mortgage payment of $765, up $116 from last year. In the less-expensive Holmes County, median home prices rose by 12.3% to $70,301. The typical monthly mortgage payment was up $37 to $269.