While there aren't any major federally imposed changes on tap for 2015, various first-time homebuyer programs will be either unveiled or reintroduced at the state and local levels in January.
The Home Buying Institute recently laid out details for a variety of programs designed to benefit new prospective buyers, all of which will be facilitated by partnerships between state or local agencies and the lenders, developers and nonprofit organizations who support them. Grants will be provided for more low- and middle-income buyers to cover upfront expenses, down payments and closing costs as part of efforts at stimulating greater local sales activity. Program details vary depending on the state or local municipality, but almost all involve agencies partnering with lenders to make manageable home loans available to first-time buyers. Some incorporate free classes and counseling for consumers, while others provide specific assistance in the form of down-payment funds, zero-interest deferred-payment loans, potential tax credits or homebuyer incentives.
With few exceptions, these opportunities are predicated on three main factors: being a first-time buyer, having a lesser income or agreeing to undergo some form of housing education. In many cases, individual program requirements include a combination of these terms, and individuals seeking more information regarding their own qualifications are encouraged to consult the Department of Housing and Urban Development website. HUD has an electronic database dedicated to filtering programs for prospective homebuyers on state, city and county levels. A few notable examples include:
• The Georgia Dream Homeownership Program offers down-payment assistance for first-time buyers who can contribute at least $1,000 toward upfront costs and meet other basic qualification standards. First-timers are defines as those who have not bought a property within the previous three years, though buyers must meet additional qualifications by falling within the low- to moderate-income bracket.
• The Maryland Mortgage Program, a state-level system initiated by the Department of Housing and Community Development focuses on helping buyers with closing costs, down payments and escrow-related expenses. Through partnerships with statewide developers and community organizations, the program supports broader access to zero-interest loans and cash grants. Household income is the primary consideration as Maryland, which has been seen high foreclosure rates in many parts of the state, and is seeking to promote future homeownership rate through more sustainable means.
• Pittsburgh's First Front Door initiative serves as an example of a metro-level program with slightly more specific terms for both qualified buyers and the partnering organizations. Established by FHLBank Pittsburgh, the program aims to provide "low-cost funding for affordable housing," meaning it covers closing costs and down payments for buyers who can make an open-ended level of contribution to start. In essence, every dollar the borrower contributes equates to $3 in grant assistance. The program allows up to $5,000 per borrower to be allocated toward housing costs, with the next round of funding scheduled to kick in at the start of 2015.
The Home Buying Institute has noted it remains unlikely any new first-time homebuyer tax credits will be approved in 2015 by the federal government. The most recent federally subsidized home-purchase tax credits came during the tail end of the George W. Bush administration, in the form of the Housing Assistance Tax Act of 2008. That program offered first-timer buyers credits of up to 10 percent of the property price, with a ceiling of $7,500. But it expired in 2010, and no single first-time homebuying credit has been enacted to replace it since. The recession and foreclosure crisis have a lot to do with that, but so do the growing number of state- and local-level programs HUD has promoted.