Updated: Jun 8
Recently, we wrote about student loan forgiveness programs in Georgia and how they can help thousands of Georgians get rid of their student loan debt more quickly. Arguably the biggest perk of getting rid of student debt is the additional financial flexibility you'll gain in other areas of your life.
Things like buying a home will become easier and more realistic, for example.
You'll probably be pleasantly surprised to find out that Georgia also has state programs in place to encourage first time homeownership. This article will cover Georgia's various mortgage, down payment assistance, and grant programs for first-time home buyers.
Related: A Guide for First-Time Home Buyers
Buying a home in Georgia
Home prices in Georgia have increased steadily over the past few years, just like they have in the rest of the country. As of May 2022, the average home price is $311,832, according to Zillow. In just the past year, this marks a 27.7% price increase.
With prices nearly 30% higher than a year ago, and interest rates making mortgages more expensive by the month, some buyers have seemingly been sidelined for now. But this doesn't have to be the case.
Here are some estimated costs as you consider purchasing your first home in Georgia:
Average home price
3.5% down payment (FHA loan min)
10% down payment
20% down payment
Georgia first-time home buyer loans
First-time home buyers in Georgia have a number of options in terms of mortgage home loans. Among these options are:
Conventional mortgages (fixed rates or ARM)
Some first-time buyers will find it best to just go with a conventional mortgage, especially if they have a significant down payment saved up already. But for those that don't, there are multiple other programs out there designed to get you into a house more quickly. After we cover these loans, we'll dive into Georgia specific programs.
1. Conventional mortgages
Buyers may opt for a conventional mortgage through a traditional lender. These mortgages, which usually carry terms between 15-30 years, may carry either a fixed or adjustable interest rate, but will require the most money in a down payment.
2. Conventional 97 loans
Georgia buyers may also consider Conventional 97 loans, a mortgage program that requires a down payment of only 3% and allows for private mortgage insurance (PMI) to be cancelled once you hit 20% equity. They are intended to be a competitive alternative to FHA loans, since FHA loans don't currently allow for PMI to be cancelled.
They also carry less upfront fees than FHA loans, and carry the following terms and program guidelines:
Loan amounts below $647,200
The property must be used as a primary residence
3. Federal Housing Administration (FHA) loans
Your next option is taking an FHA loan through an approved lender in Georgia. These federally backed loans are reserved for those that have never purchased a home before, and require a 3.5% down payment. Eligible program participants will:
Have a credit score of at least 580 (those with lower scores may qualify but will need a larger down payment
Have a debt-to-income ratio of less than 43%
Have steady income and employment
4. USDA home loans
Low to moderate income Americans buying homes in USDA designated rural areas may qualify for low or zero down payment mortgage loans through the United States Department of Agriculture.
Large areas of rural Georgia qualify for the program. Better yet, you may even qualify for the USDA loan without a down payment if you:
Are a U.S. citizen or non-citizen national
Occupy the purchased home as your primary residence
Meet income requirements in your area (cannot exceed 115% of the median household income in your area)
5. VA loans
If you are a Veteran, service member, or surviving military spouse in Georgia, you may be eligible to utilize a VA home loan. Among the many benefits to taking out a VA loan are:
Competitive interest rates offered
Lower closing costs
No need for private mortgage insurance (PMI)
No down payments required
As a VA benefit, they are available throughout your life. As such, you do not have to be a first-time home buyer to take advantage.
Georgia's first-time home buyer programs
On top of these loan programs, future home buyers in Georgia may want to take advantage of a Georgia Dream Homeownership Program, a program offered by the Georgia Department of Community Affairs (DCA).
The Georgia Dream program
The Georgia Dream program offers loans that can fall into any of the following categories, so long as they are 30-year fixed:
Under the guidelines of the program, qualifying borrowers may receive competitive mortgage rates and the potential for both down payment and closing cost assistance. Georgia Dream does have special provisions for those that are disabled, first responders, teachers, and healthcare workers.
Applicants to the Georgia Dream program will need to meet the following eligibility requirements:
Be a first-time home buyer, a previous homeowner that has not owned a house in the previous three years, or purchasing a home in a program defined area
Be within program income limits, which vary by county
Be within program home sale price limits, which vary by county, but are either $275,000 or $325,000
Have liquid assets of less than $20,000 or 20% of the house's purchase price
Here is a list of Georgia Dream participating mortgage lenders.
First-time home buyer down payment assistance and grants in Georgia
Every state in America has their fair share of down payment support and grant programs designed to increase homeownership rates among first timers, and Georgia is no exception.
The most notable of these programs is the down payment assistance program that accompanies the Georgia Dream program.
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