Rate Relief for First-Time Homebuyers in Idaho

Buying your first home in Idaho just got more affordable.

Idaho Housing recently increased income and sales price limits for its First Loan Tax-Exempt home loan product. This means more first-time homebuyers can now access lower rates, often up to 1% lower than other loan programs!

In addition to lower rates, eligible buyers can access down payment assistance to help with the down payment and/or closing costs. Down payment assistance allows buyers to purchase a home with as little as 0.5% of their own funds down.

How much of a difference does this make? Here’s a hypothetical example

Jake and Kate, a married couple in Nampa with a household income of $120,000, have two kids and want to purchase their first home. They saved $25,000 for a down payment and want to put at least 5% down.

According to our homebuyer education course, Finally Home!, most people who have good credit and a steady income, who do not have a lot of other debt, can afford to buy a home that costs 2.5 to 3 times their annual gross income. Jake and Kate can afford a home priced $300,000-$360,000.

They found a home that fit their needs for $325,000 and were originally pre-approved at a 6.75% rate, putting their monthly payment at $2,450. Jake and Kate could buy this home at that rate, but it would stretch their monthly budget thin.

With the First Loan Tax-Exempt home loan, they were able to lock in a 5.75% rate, which brings their monthly payment down to $2,249 and puts over $200 back in their pockets each month.

Breakdown:

• Home Price: $325,000
• Down Payment: $16,250 (5% of $325,000)
• Closing Costs: $5,000
• Interest Rate: 5.75%
• Monthly Payment: $2,249
  • Principal and Interest: $1,802
  • Mortgage insurance: $196
  • Property taxes: $138
  • Home insurance: $114

Here’s an example if Jake and Kate wanted to use down payment assistance

Jake and Kate decided they want to use down payment assistance so they can have more money in savings after buying. Down payment assistance reduces the amount of upfront cash you need to purchase a home, allowing you to sustain a savings and start homeownership with money in the bank necessary for successful homeownership.

They decided to put $5,000 of their own funds down and use $11,250 in down payment assistance. They used Idaho Housing’s down payment assistance in the form of a second mortgage, which created an additional monthly payment of $104.29. Their total monthly mortgage payment would be $2,353.29, still nearly $100 less than their original mortgage payment option.

Breakdown:

• Home Price: $325,000
• Down Payment: $16,250 (5% of $325,000)
  • $5,000 of their own funds
  • $11,250 in down payment assistance
• Closing Costs: $5,000
• Interest Rate: 5.75%
• Monthly Payment: $2,353.29
  • Principal and Interest: $1,802
  • Mortgage insurance: $196
  • Property taxes: $138
  • Home insurance: $114
  • Down payment assistance (second mortgage): $104.29
    • Interest rate on second mortgage is 2% higher than first mortgage (7.75%)

Remember, these are hypothetical situations; many factors influence home affordability. Debt-to-income ratio, credit score, employment history, closing costs, and HOA fees, just to name a few, determine how much home you can afford. However, these examples demonstrate the potential savings for first-time homebuyers in Idaho who use this program.

To see if you qualify, get in touch with one of our lending partners here. If you don’t qualify for this specific program, our partners can help you identify other programs that best fit your financial situation.

Not sure if you’re ready to buy a home? Finally Home! provides you with the confidence you need to get started. Learn more here.

 

*Programs are subject to change at any time.  Funds are limited, and certain restrictions apply.