Beautiful university towns with highly-rated schools, a thriving economy, and a low cost of living. If you’re a first-time homebuyer ready to set roots, a new home in Missouri may be just the ticket.
From Columbia and St. Louis to Branson in the Ozark Mountains, first-time homebuyers have a wide selection of options in Missouri. Bonus: The median home value is only $157,200 — far lower than the national average of $245,000, plus transportation and grocery costs are also below the national average, making Missouri a great place to retire.
Still, buying a home is one of the most expensive purchases you’ll make in your lifetime. Fortunately, Missouri has a number of statewide and local homebuyer assistance programs that can make a world of difference, from helping with your down payment and closing costs to securing a low-interest home loan and making use of federal tax breaks. Read on to learn more about these programs, including the fine print on eligibility requirements and how to apply.
Who Qualifies as a First-Time Homebuyer in Missouri?
A first-time homebuyer in Missouri is defined as any family or individual who has never owned a home or has not owned a home in the past three years. Most of the state and local programs described below, however, aren’t restricted to first-time homebuyers. The emphasis is on helping homebuyers with low to moderate incomes, veterans, and repeat buyers purchase a home in a targeted area.
Statewide Homeownership Assistance Programs
The Missouri Housing Development Commission (MHDC) operates a series of statewide homebuyer programs tailored to help first-time homebuyers, repeat homebuyers and military veterans. Here’s a closer look at each program’s details, how to apply, and some of the fine print.
First Place Homebuyer Program
The First Place Homebuyer Program is MHDC’s flagship program, providing first-time homebuyers with a 30-year fixed-rate mortgage that’s set at lower-than-market interest rates. If you’re a repeat homebuyer, you can also apply for a First Place loan if you haven’t owned a home in the past three years, you’re buying a home in a targeted area in the state or you’re a qualifying veteran.
To be eligible for a First Place loan, you must have a credit score of 620, although this varies depending on your lender and mortgage type. You also must meet purchase price and household income limits, and you must occupy the home you’re buying within 60 days of closing. Borrowers also need to work with one of the MHDC’s participating lenders.
Visit the First Place program site for full details. The MHDC also has a brochure that outlines purchase price limits, household income limits and any other stipulations homebuyers will need to follow to qualify.
Next Step Program
The MHDC’s Next Step Program opens up financial assistance to non-first-time homebuyers who are from low- to moderate-income households. The program also provides 30-year low-interest fixed-rate mortgages issued through participating lenders. Homebuyers will need a credit score of about 620 and must buy a home within the purchase price limits listed for this specific program.
Cash Assistance Loan
Once you qualify for either a First Place or Next Step loan, it’s worth checking to see if you’re eligible for a Cash Assistance Loan, which provides funding to eligible homebuyers to help with their down payment and closing costs. You could be eligible to receive a forgivable second mortgage of up to 4 percent of your loan amount. It’s an interest-free loan and you don’t have to worry about making repayments. The loan is forgiven if you stay in the home and use it as your primary residence for at least 10 years. The loan diminishes starting at year five through to year 10.
Your other option is a Non-Cash Assistance Loan, which provides a lower interest rate to first-time homebuyers who do need down payment or closing cost help. You’ll end up with even lower monthly mortgage payments, and you get to keep this perk for the duration of your mortgage so it’s a great choice if it’s a feasible option for you. Once again, income limits and purchase price limits apply.
Mortgage Credit Certificate
The MHDC offers eligible homebuyers a non-refundable federal income tax credit — a mortgage credit certificate (MCC) — to be used with their mortgage. It is available to all first-time homebuyers, veterans, and repeat homebuyers in targeted areas. An MCC reduces a homeowner’s federal income taxes, creating additional income to put toward mortgage payments and other household expenses. Qualified homebuyers can credit up to 25 percent of their annual mortgage insurance paid against their year-end tax liability, to a maximum credit of $2,000 per year. The tax credit is allowable every year for the life of the mortgage (up to 30 years). Unused portions of the credit can even be carried forward for up to three years or until used, whichever comes first. The credit can also be used with a Cash Assistance Loan or a Non-Cash Assistance Loan.
The MCC can only be issued by the MHDC through a participating lender before closing and it is typically set aside for low- to moderate-income homebuyers. Household income and purchase price limits apply.
Read more about Missouri’s Mortgage Credit Certificate on the MHDC website.
Missouri First-Time Homebuyer Savings Account
In 2019, Missouri launched its First-Time Homebuyer Savings Account program, which allows account holders to contribute up to $1,600 (or $3,200 joint) tax-free each year to a dedicated down payment savings account. You must name yourself as the account beneficiary but you can change it at any time, as long as there is only one designated beneficiary at any time.
To qualify for this account, you must be a first-time homebuyer or a buyer who hasn’t owned a home in at least three years. Your contributions must remain in your account for at least 90 days before use, and your contributions can’t sit in your account for longer than a decade. Most banks across Missouri offer this savings account. Check with your bank to start the process of opening your account. Read more at MissouriFirstHome.com.
Homebuyer Programs by Location
It’s also worthwhile to check on local homebuyer assistance programs and incentives. These can range from being exclusively for first-time homebuyers to helping any homebuyers — including repeat homebuyers — who are within a lower-income bracket. Read more for our complete rundown of local programs.
Homebuyers in Columbia can make use of its Homeownership Assistance Program, which helps low- to moderate-income families buy a home within city limits. The program provides up to $10,000 or 10 percent of a home’s purchase price, whichever is less, in a 10-year forgivable loan. The loan is set at zero interest, but the funding can only be used for your down payment and closing costs.
Applicants need to be first-time homebuyers or buyers who haven’t owned a home in the past three years. “Displaced homemakers” or a single parent coming out of a divorce can also qualify. Applicants must complete a homebuyer’s education course and contribute a minimum of $500 in cash toward the down payment. They also cannot have more than $15,000 in savings to qualify for this financial help.
Here’s a full look at Columbia’s Homebuyer Assistance Program, including how to apply and which property types are eligible.
Jefferson City provides first-time homebuyers with down payment assistance of $5,000 in the form of a zero-interest loan. Income limits apply, and assistance is provided on a first-come, first-served basis. Visit the city’s website to learn more and to check on fund availability.
The Joplin Homebuyer Assistance Program can help families secure the keys to a new home with grants from as low as $1,000 up to $30,000. The funding is provided in a forgivable loan. Applicants must secure a first mortgage and make sure their household annual income doesn’t exceed the median income levels in the city.
A mortgage lender will calculate how much assistance a person qualifies for, then sends the request to the city for approval.
If a loan is less than $15,000, it’s forgiven within five years. Loans that are between $15,000 and $30,000 are forgiven over the course of a decade. Check out the program details on the city of Joplin’s website.
The First-Time Homebuyer Program in Lee’s Summit provides grants of up to $3,000 to low-income homebuyers, including anyone who hasn’t owned a home in the past three years, to help with closing costs.
The priority is to help low-income households so income limits apply. For a family of four, for example, your total gross income must be $59,850 or less. The funding for this program is limited, so applicants are awarded based on a first-come, first-served basis. Check out the full details, including contact information for program administrators, on the Lee’s Summit website.
O’Fallon offers down payment assistance in the form of a zero-interest $10,000 loan. The funding is forgivable as long as you live in the home for up to five years.
The program is geared toward low- to moderate-income first-time buyers, and applicants must go through pre-purchase housing counseling to be eligible. You can read more about the program on the city of O’Fallon website.
Springfield has a down payment assistance program that provides no-interest loans of up to $5,000. The loan is deferred until the home is no longer the homeowner’s primary residence. Funding is through the U.S. Department of Housing and Urban Development (HUD) for households with total income of less than 80 percent of the Springfield median income. The program also has home purchase price limits and target area specifications. To learn more, visit the city of Springfield website.
St. Charles County
St. Charles County, located northwest of St. Louis, has a Down Payment Loan Program that provides zero-interest down payment loans of up to $10,000 to income-eligible homebuyers in the area. These second mortgage loans are forgivable after five years of living in your new home and using it as your primary residence.
You don’t have to be a first-time homebuyer to be eligible for this incentive. The emphasis is on helping low-income families so maximum household income limits apply. Housing counseling is required for loans up to $5,000.
The charming city of St. Louis happens to house the largest real estate market in Missouri. And the Community Action Agency of St. Louis County runs the housing assistance program, including the Individual Development Account (IDA) program. Under the IDA, a homebuyer opens a savings account and deposits at least $10 per month; those dollars are then matched up to $2,000 per year by the agency.
To qualify, first-time homebuyers need to complete a homebuyer’s education course, work on improving their credit history, take “financial fitness” courses and meet one-on-one with a HUD-certified housing counselor. The program’s focus is to teach homebuyers about money management, encourage them to save and prepare them for the long-term goal of keeping up with their mortgage and other homeownership expenses.
Eligible households in St. Louis can apply for up to $3,000 in a zero-interest deferred loan that’s only repaid upon sale or transfer of the deed. Families in the city of Florissant can apply for up to $3,500 in a zero-interest loan that’s forgiven after five years. St. Charles City and County provide up to $5,000 in a zero-interest deferred loan that’s repaid only when you sell or transfer your property. St. Charles County includes Cottleville, Dardenne Prairie, Lake St. Louis, St. Paul, St. Peters, Weldon Spring and Wentzville.
Household income must not exceed 80 percent of the region’s median income, applicants must contribute at least $1,000 of their own funds, and they must be able to secure a fixed-rate first mortgage. Get more details on the agency’s website.
Ready to Call Missouri Home?
Stunning state parks nestled around lakes and rivers; great schools, libraries and museums; and thriving cities packed with culture and steeped in history — the Show Me State has plenty to offer. Across the state, you will find a variety of housing choices whether you are shopping for a home in Joplin, Kansas City or St. Louis. Not looking for a bustling city home? Try a suburban home instead.
So, take a look at Missouri’s homebuyer assistance programs and incentives to help you zero in on your dream home purchase.
The links on this site were researched by NewHomeSource. This is as cohesive a list as possible. Individual homebuyers should contact entities to fully understand requirements and processes.
Carmen Chai is an award-winning Canadian journalist who has lived and reported from major cities such as Vancouver, Toronto, London and Paris. For NewHomeSource, Carmen covers a variety of topics, including insurance, mortgages, and more.