Columbia Down Payment Assistance and First-Time Homebuyer Programs

Down payment assistance programs in Columbia

Down payment assistance and first time home buyer programs aim to help home buyers make a larger down payment, cover closing costs, or a combination of both. There are several types of home buyer benefits, including grants, forgivable loans, and interest rate reductions and tax credits.

A grant is similar to a scholarship for college. You apply, and if you qualify for the program (i.e. meet all the criteria and the entity still has the money), you can receive funds toward your down payment or for another upfront cost related to your home purchase. 

A down payment loan (or second mortgage loan) is a loan you acquire in order to have the funds for a down payment. Many loan types require a minimum down payment between 3% and 20%. If you don’t have this money saved (many first-time home buyers don’t) then a down payment loan is an option to help you qualify. Some loans are even forgivable if you meet certain requirements like staying in the home for a few years.

Less commonly, some programs come with lower interest rates and tax credits (e.g., mortgage credit certificates) to help lower your monthly payments.

City of Columbia Homeownership Assistance Program

The City of Columbia sponsors its own Homeownership Assistance Program for buying within Columbia city limits. It’s designed for first time home buyers and displaced homemakers (primary caregivers who are unemployed).

Down payment assistance: $5,000-$10,000

Assistance type: 10 year Forgivable loan (0% interest)

Sponsor: City of Columbia

Income limits: $52,200 (family of 1), $74,550 (family of 4)

Purchase price limit: Up to $482,000 (different limits by bedrooms for existing homes and new builds)

Minimum borrower contribution: $500

Eligibile borrowers:

• First time homebuyers or displaced homemakers
• Must complete homebuyer education course
• Buyer(s) must have an average combined credit score not less than 600
• Buyer(s) cannot have more than $15,000 in readily available resources
• Prior to receiving city funds, the buyer is required to sign a Deed of Trust, Promissory Note, and Borrower’s Agreement to prevent the leasing, subleasing or selling of their home for a minimum of ten years

Statewide down payment assistance programs available in the city of Columbia

MHDC First Place Loan

The Missouri Housing Development Commission sponsors several programs for Missouri homebuyers. The MHDC First Place loan program is a great down payment assistance program for first time home buyers and veterans who are looking to become homeowners. To take advantage of MHDC loan program, you’ll need to work with one of their certified lenders. Stairs Financial can help match you with a lender that’s right for you.

Down payment assistance: Up to 4% of the mortgage amount

Assistance type: Forgivable second mortgage (10 year forgivable loan)

Sponsor: MHDC

Income limits: Up to $117,875 in Kansas City area, $115,575 in St. Louis area, $107,180 in Columbia area, $100,625 in Jefferson area, $98,440 in all other areas

Purchase price limit: $481,176 ($616,111 for 2-family residence)

Minimum borrower contribution: None

Loan requirements: 

• Initial 30-year purchase loans
• FHA loans, VA loans, or USDA loans
• FNMA HFA Preferred Conventional or Freddie Mac HFA Advantage Conventional
• Refinanced mortgage loans are not eligible. Exceptions are construction-to-permanent loans and bridge loans with an initial term of less than 24 months.

Eligible borrowers:

• First-time homebuyer or Veteran
• Minimum credit score of 640 (however, loans are subject to federal compliance requirements and may have minimum credit scores greater than 640—lenders reserve the right to be more restrictive)
• Debt-to-income ratio of 45% or less
• Debt-to-income ratios up to 50% or less for FHA and Government Sponsored Entities (minimum credit score of 680 with these circumstances)

MHDC Next Step Loan

The MHDC Next Step program is similar to the First Place program, but there’s no first time home buyer requirement. Furthermore, there are higher income limits and purchase price limits, so if you don’t qualify for First Place but you still want a down payment loan program that can provide closing cost assistance, you could still qualify for Next Step.

Down payment assistance: Up to 4% of the mortgage amount

Assistance type: Forgivable second mortgage (10 year forgivable loan)

Sponsor: MHDC

Income limits: Up to $143,500 in Kansas City area, $140,700 in St. Louis area, $130,480 in Columbia area, $122,500 in Jefferson area, $119,840 in all other areas

Purchase price limit: $588,104 ($753,024 for 2-family residence)

Minimum borrower contribution: None

Loan requirements: 

• Initial 30-year purchase loans
• FHA loans, VA loans, or USDA loans
• FNMA HFA Preferred Conventional or Freddie Mac HFA Advantage Conventional
• Refinanced mortgage loans are not eligible. Exceptions are construction-to-permanent loans and bridge loans with an initial term of less than 24 months.

Eligible borrowers:

• Minimum credit score of 640 (however, loans are subject to federal compliance requirements and may have minimum credit scores greater than 640—lenders reserve the right to be more restrictive)
• Debt-to-income ratio of 45% or less
• Debt-to-income ratios up to 50% or less for FHA and Government Sponsored Entities (minimum credit score of 680 with these circumstances)

MHDC Mortgage Credit Certificate

Tax credits are an important way to manage your monthly housing costs as a home buyer. The MHDC Mortgage Credit Certificate lets first time home buyers claim a tax credit on their federal tax return for a portion of mortgage interest paid during a tax year, reducing their mortgage expenses. Missouri home buyers can combine the MHDC Mortgage Credit Certificate with the Next Step program as well.

Tax Credit: Up to $2,000

Assistance type: Federal tax credit

Sponsor: MHDC

Income limits: Up to $143,500 in Kansas City area, $140,700 in St. Louis area, $130,480 in Columbia area, $122,500 in Jefferson area, $119,840 in all other areas

Purchase price limit: $588,104 ($753,024 for 2-family residence)

Minimum borrower contribution: None

Loan requirements: 

• Initial 30-year purchase loans
• FHA loans, VA loans, or USDA loans
• FNMA HFA Preferred Conventional or Freddie Mac HFA Advantage Conventional
• Refinanced mortgage loans are not eligible. Exceptions are construction-to-permanent loans and bridge loans with an initial term of less than 24 months.

Eligible borrowers:

• First-time homebuyer or Veteran
• Minimum credit score of 640 (however, loans are subject to federal compliance requirements and may have minimum credit scores greater than 640—lenders reserve the right to be more restrictive)
• Debt-to-income ratio of 45% or less
• Debt-to-income ratios up to 50% or less for FHA and Government Sponsored Entities (minimum credit score of 680 with these circumstances)

Disclaimer: This article is for informational purposes only and should not be considered as legal or financial advice. Please consult an attorney, mortgage lender, or CPA for guidance on your specific situation.