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Step Up Homebuyer Program

The Step Up program is for low-to-median income families who can afford a mortgage but need help with the down payment or closing costs. Assistance comes in the form of a 10-year second mortgage.

Program Income Limit:

  • Borrowers earning less than $130,600 are eligible for the FHA/VA Step Up program, regardless of household size or location.
  • Borrowers earning 80 percent or less of the Area Median Income (AMI) OR $130,600 (whichever is less) are eligible for Conventional Step Up (HFA Advantage).
  • Borrowers earning over 80 percent of the AMI but less than $130,600 are eligible for Freddie Mac Advantage Loan Product.


Additional Information and Qualifications:

  • HFA Advantage can be used with conventional, FHA, VA loans only
  • Assistance of 4% of the sales price up to $10,000
  • Maximum 45% debt-to-income ratio
  • Homebuyers must complete a homeownership education course


The Mortgage Credit Certificate (MCC) Program

The Mortgage Credit Certificate program is available with conventional fixed-rate, FHA, USDA, and VA loans. MCCs provide a tax credit to reduce the amount of federal taxes each year. The remaining annual interest may be claimed as a mortgage interest deduction on the homebuyer’s federal tax return.

How does the MCC program work?

Qualified buyers receive a federal tax break or tax refund each year or benefit from immediate savings by updating the withholdings on their W-4 form. MCCs may be paired with AHFA’s Step Up program or any other 30-year, fixed-rate, amortizing mortgage offered by a participating lender.

Mortgage credit rates are based on the loan amount

  • 20% MCC for loans of $150,001 or greater: no cap
  • 30% MCC for loans of $100,001 to 150,000: $2,000/year cap
  • 50% MCC for loans of $100,000 or less: $2,000/year cap


National First-Time Homebuyer Loan Programs

  • FHA LoansFHA home loans are very popular with first-time homebuyers cause they require a 580 credit score with just a 3.5% down payment. Debt-to-income ratios up to 50% are allowed making them perfect for low-income borrowers.
  • Conventional LoansConventional loans require a 620 credit score and a 5% to 20% down payment. If you put 20% or more down, mortgage insurance will not be required.
  • USDA LoansUSDA mortgage loans are for low-to-median income borrowers buying a home located in a USDA-eligible rural area. They provide 100% financing with a 620 or higher credit score. Mortgage insurance is required but the rate is the lowest of any type of mortgage program available.
  • VA Loans – Veterans of the U.S. military may be eligible for a VA home loan. No down payment or mortgage insurance is required and veterans with a 580 to 620 credit score are eligible.
  • HomeReady and Home Possible Loans – Freddie Mac and Fannie Mae created the HomeReady and Home Possible loan programs for low-income first-time homebuyers whose income does not exceed 100% of the area median income requiring just a 3% down payment and a 620 credit score.


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