First-Time Homebuyer Programs in Alaska

The down payment on a new home is often the biggest hurdle for first-time homebuyers. In Alaska, with an average home value of $364,674, you would need $72,935 to avoid private mortgage insurance.

Fortunately, there are first-time homebuyer programs available in Alaska to help you achieve homeownership. There are also mortgages that allow first-time homebuyers to put less down on a home, but these usually have income requirements and require mortgage insurance. MoneyGeek explores several state-specific and government-backed first-time homebuyer programs for people from different financial backgrounds.

Alaska offers grants and loans to assist first-time homebuyers in covering both down payment and closing costs. We've compiled the first-time homebuyer programs offered by the Alaska Housing Finance Corporation (AHFC) to help you find the best option for your particular needs and situation.

AFHC's First Home Limited provides lower interest rates to first-time homebuyers who meet the maximum income and acquisition cost limits. The federal regulations establish the maximum income limits and acquisition costs for this program. Income and acquisition cost limits may be higher in targeted areas (HUD-designated census tracts). For those looking into a mortgage, this program could be an advantageous option, especially if you qualify for the higher limits in designated areas.

The First Home program from the Alaska Housing Finance Corporation (AFHC) provides a reduced interest rate to eligible first-time homebuyers. Unlike some other programs, it does not impose maximum income or acquisition cost limits. This makes it an attractive option for individuals whose income exceeds the limits of the First Home Limited program, or for those who wish to purchase a home that surpasses those acquisition cost limits. By removing these restrictions, the First Home program offers greater flexibility for a broader range of buyers, allowing more people to take advantage of the benefits associated with homeownership.

The Affordable Housing Enhanced Loan program (AHELP) is designed to work in partnership with other agencies to promote affordable home ownership. Through AHELP, qualified borrowers can receive down payment assistance or secondary financing. The assistance may be a grant, deferred payment(s), a forgivable loan or a combination of these options and may come from a local, state or federal governmental agency, nonprofit agency or regional housing authority.

The Interest Rate Reduction for Low-Income Borrowers (IRRLIB) program offers subsidized interest rates on any owner-occupied single-family loan to low-income borrowers. Reductions of 0.5% or 1% are available depending on family income, which may not exceed income limits for the area.

The interest rate reduction applies to the first $180,000 of the loan amount. Loans exceeding $180,000 receive a blended interest rate rounded up to the next 0.125%.

In Alaska, there are zero-down-payment loan programs available that allow homebuyers to purchase a home without putting money down. USDA and VA loans are two examples of government-backed loans that come with no down payment.

USDA loans are designed to help eligible rural and suburban homebuyers achieve homeownership. Issued by the U.S. Department of Agriculture, these loans are part of the Rural Development Guaranteed Housing Loan program. They cater to individuals and families looking to purchase a home in designated rural areas, offering a pathway to homeownership with favorable terms.

USDA loans provide several benefits, including no down payment, competitive interest rates, and the ability to finance closing costs. These loans are intended for primary residences and typically require mortgage insurance. Applicants must meet credit requirements, although they are often more lenient compared to conventional loans.

To qualify for a USDA loan, the property must be 2,000 square feet or less and located in a USDA-eligible rural area with a population under 35,000. Additionally, applicants must meet income limits that vary by location. These limits are based on a four-person, low-income household. For instance, if City 1 has an income limit of Income Limit 1, and City 2 has a limit of Income Limit 2, these figures illustrate the variation across different areas. Understanding these criteria can help determine eligibility for a USDA loan.

VA loans, issued by the VA loans, are designed to help veterans, active service members, and certain military spouses become homeowners. These loans are provided by the U.S. Department of Veterans Affairs, offering a range of benefits to those who have served.

VA loans offer several advantages, including no down payment requirement, which can make homeownership more accessible. Additionally, these loans do not require private mortgage insurance (PMI), reducing monthly costs. VA loans also generally have lower interest rates compared to private loans. As of November 2024, the APR for a 15-year fixed-rate VA loan in Alaska is 6.03%, while a 30-year fixed-rate VA loan stands at 6.31%.

Eligibility for VA loans depends on your length of service, duty status, and character of service. Additionally, you must meet specific income limits that vary by location. A valid Certificate of Eligibility (COE) is also required. Understanding these requirements can help you determine if a VA loan is the right choice for your home financing needs.

First-time homebuyers in Alaska can take advantage of low-down-payment loan programs that allow them to finance their home with a down payment of 3.5% or less. These programs include conventional, FHA and FHA 203(k) loans.

FHA loans and conventional loans are frequently compared as they are the two most common types of mortgages. FHA loans require a minimum down payment of 3.5%, while conventional loans can require as low as 3% for first-time homebuyers. Conventional loans typically have stricter credit score and debt-to-income ratio requirements, making FHA loans more accessible for some borrowers.

The current APR for a 15-year fixed-rate conforming loan in Alaska is 6.22% (November 2024). In comparison, the APR for a 15-year fixed-rate FHA loan is 7.59%. APRs on FHA loans can be higher due to more fees and extra costs associated with government-backed loans.

You can use our FHA vs. conventional loan calculator below to help you compare both FHA and conventional mortgage programs and determine the best option for you.

We answered common questions about first-time homebuyer programs in Alaska to help you identify the best option and move closer to owning a home.

Explore additional MoneyGeek resources for first-time homebuyers in Alaska to help you with the homebuying process.