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Portland, OR - First Time Home Buyer

Learn How to Get a Mortgage to Buy Your First Home in Portland, Oregon
Mortgage Program Options - Down Payment Assistance - Frequently Asked Questions

Portland, OR – First Time Home Buyer Programs

Are you looking to purchase your first home? Our Oregon first time home buyer programs might be the perfect solution to help you obtain the financing you need to purchase the home you desire. We provide excellent home financing options, and encourage you to compare our offered loan terms to other mortgage lenders.

Portland, OR – First Time Home Buyer Loans

There are 5 types of first time home buyer loans.  You may select different loan terms, such as a fixed rate or adjustable rate mortgage, and the number of years to repay the loan (such as a 30 year fixed rate mortgage).

Types of Mortgages:

  • Conventional Loans – Conventional loans offer the best loan terms to borrowers with good or excellent credit (620 FICO or higher), as well as those who can afford to place a larger down payment.  If you are able to put 20% or more down, you will be able to avoid paying private mortgage insurance (PMI).  However, conventional loans also offer low down payment options, such as programs that only require 3% down.
  • FHA Loans – FHA loans are a good option for borrowers who may not be able to qualify for a conventional loan.  The qualification requirements for FHA loans are much more lenient than conventional loans.  This includes options for home buyers with credit scores as low as 500 (in order to qualify for a 3.5% down payment, you must have a credit score of at least 580). The 2019 FHA loan limits for Portland (Multnomah County) are as follows:  Single unit: $474,950.   Two units: $608,000.  Three units: $734,950.  Four units: $913,350.
  • USDA Loans – USDA loans provide home buyers the opportunity to purchase a home without any down payment.  These loans are intended for borrowers with low-to-moderate income.  In addition to not requiring any money down, you can also finance the closing costs into the loan.  This means you can essentially buy a home with no money out of pocket!
  • VA Loans – Active duty military members and veterans can apply for a VA loan which allows you to buy your first home without any down payment.  These loans are not available to the general public, but exclusively to military/veterans.
  • Jumbo Loans – Any mortgage that does not meet the conforming loan limits is a jumbo loan.  The 2019 conforming loan limits for Portland (Multnomah County) are as follows:  Single unit: $484,350.  Two units: $620,620.  Three units: $432,400.  Four units: $537,400.  If you want to buy a more expensive home, and have the income to qualify, we provide what are known as jumbo loans up to $2,000,000.

The above 5 types of loans are the main first time home buyer options that exist.  We can help you determine which loan is the right fit for you based on your particular needs and eligibility.

Portland, OR – Down Payment Assistance Programs

First time home buyers in Portland may be eligible for down payment assistance.  This includes a statewide program, as well as one that is exclusively offered in the City of Portland.

Portland Housing Bureau – Down Payment Assistance Program

Designed for first-time homebuyers seeking residence in the Lents Town Center Urban Renewal Areas and Portland’s Interstate Corridor, this loan works as a second mortgage used in conjunction with a first mortgage provided by a participating lender. The total amount awarded ranges from $48,000 to $61,000 with an added grant of 25% of the amount of the loan for home improvements. This totals out to be about $12,000 to $16,000. It is a 30-year loan and earns 0% per year with a 0.012% Annual Percentage Rate (APR). There is a $500 underwriting fee so that the borrower’s risk assessment can be determined.

Program Requirements

  • Eligible applicants are first-time homebuyers that have not owned a house in the past three years.
  • The property must be continually used as the primary residence.
  • Household income must be below 80% of Portland’s median income.
  • Borrower must be able to secure a first mortgage.
  • Assets can be no more than $10,000 in total by time of closing.
  • Borrower must be a legal resident of the United States.
  • Applicant is required to complete a HUD-approved homebuyer education course.
  • No less than $500 of applicant’s money must be put toward the loan. Gift funds are acceptable.
  • The property itself must be located either on the East or West side of the Interstate Corridor or the Lents Town Center Urban Renewal Areas.
  • Only single-family units are acceptable, including town homes and pre-existing condos. New condos are not covered by this loan.
  • Short sales are not allowed unless the buyer can prove that all lien holders have agreed to the price of sale and closing is possible in the typical range of time.

You can learn more about this program on the city of Portland website.

Oregon Housing and Community Services – Residential Loan Program

Periodically, Oregon Housing and Community Services will issue mortgage revenue bonds as a way to assist eligible households in obtaining lower than market rate interest loans on their first home. More commonly referred to as the Oregon Bond Loan, this program helps families both make a house purchase and keep monthly payments low enough to afford.

Program Options

  • Cash Advantage – This is the down payment assistance loan. It gives borrowers a fixed rate loan of lower interest along with cash assistance of up to 3% of the loan itself. These fund can then only be used to pay for down payment and closing costs.
  • Rate Advantage – This simply helps give borrowers the lowest fixed rate possible as a way to maximize property purchasing potential through affordability.

Program Requirements

  • Household income levels must fall under the limits set forth by Oregon Housing.
  • Borrowers can only be first-time homebuyers, meaning they cannot have owned any sort of principal residence in three years prior to closing. This is waived, however, if the property is located in a designated area.
  • Borrowers must be Oregon residents and must agree to inhabit the home primarily.
  • Applicants cannot have been discharged from bankruptcy in the past two years or have suffered foreclosure in the past five years.
  • Mortgage length may vary from 15 to 30 years. This loan may be an FHA insured, USDA Guaranteed Rural or Conventional Uninsured.
  • Eligible properties must be located in Oregon and can be either existing or newly constructed. Units include site-built homes, condos, homes in a planned development and manufactured homes permanently tied to foundations. If it is a manufactured home, it must have been built after 1976 and offer its residents a living area of at least 400 feet.
  • A recapture fee is in effect for properties that are sold or refinanced within the first nine years.

To learn more about the Oregon Bond Program, visit the website of Oregon Housing and Community Services.

Frequently Asked Questions About Buying Your First Home

How much do I need for a down payment?
It depends on the type of loan you want.  USDA and VA loans often will not require any down payment.  FHA loans require a 3.5% down payment.  Conventional loans typically require either 3% or 5%.  If you receive down payment assistance, you may not need any money for your down payment.

What is the maximum loan amount that I can qualify for?
The amount that you will be allowed to borrow will depend mostly on your income, as well as the particular type of loan you are interested in. There are maximum loan limits for each type of mortgage program which are set at the county level. Conforming loan limits are the maximum loan amounts allowed for conventional mortgages.  FHA loans have their own loan limits.  This is not necessarily how much you can borrow though, but the maximum amount allowed in your location.  The amount that you can personal qualify for will be based upon your income, and how much debt you have.  For most loans, your monthly mortgage payment, along with your monthly debts may not exceed 43% of your income.

Can I buy a home without a real estate agent?
It depends on your state and the type of loan program.  For some states, you must use an agent.  In other states, you are not required to use a real estate agent for many loan program, such as conventional mortgages.  However, some loan types require that you use a real estate agent regardless of your location, such as USDA loans.

Do you have first time home buyer loans for bad credit?
Yes, we offer mortgage options for borrowers with bad credit. This includes FHA loans for bad credit, which you can possibly be approved with a credit score as low as 500. However, a 580 credit score is required for the 3.5% down payment. If your credit score is between 500-579, then you will need to put 10% down.

Can I buy a home if I owe tax debt?
For government-backed loans, such as FHA, VA, and USDA loans, you can buy a home with tax debt as long as you have made a payment plan with the IRS, and are not behind on the payments. Any federal debt must be in good standing in order to get a government-based mortgage. If your tax debts have moved into the status of a tax lien, this will prevent you from getting a home loan until it is resolved.

Can I buy a home if I have student loans?
As long as you are not delinquent on the student loan payments, and the monthly payments do not cause excessive debt-to-income ratios, you can still get a mortgage.

Can I buy a home without my spouse?
A common question is if you can buy a house without your wife or husband.  The short answer is yes. There are numerous reasons someone may want to exclude their spouse from a mortgage application, such as lower credit, lack of job history or income, or one spouse having excessive debt that could prevent an approval. You may be able to qualify and get a home loan without your spouse.

How do I know if I am ready and prepared to own a home?
It is critical to consider the often unexpected expenses of buying a home. This includes repairs, maintenance, and of course furnishing the home, monthly utilities, and all other expenses that are associated with homeownership. A common mistake is to just look at the difference in rent to your total mortgage payment. Almost every year, you can expect to have to pay for various upkeep to keep the property functional. This can include anything from repairing a hot water heater that broke, to landscaping, and various maintenance.

Something else financial consultants advise is that you have at least 3 months of reserves. This means that you could afford to make your new mortgage payment for at least 3 months in the event that you lose a job or have some other unforeseen circumstance that the savings would be needed for. This is not a requirement for most home loans, but it is good advice to consider.

Have more questions about buying your first home?  Give us a call at 1-800-731-3560.

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