First-Time Homebuyer Programs in Maine

The down payment on a new home is often the biggest hurdle for first-time homebuyers. In Maine, where the average home value is $405,170, you would need $81,034 as a down payment to avoid private mortgage insurance.

Fortunately, there are first-time homebuyer programs in Maine to help you achieve homeownership. Additionally, some mortgages allow first-time homebuyers to put less down on a home, though 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.

Maine offers grants and loans to support first-time homebuyers in covering both down payments and closing costs. We have compiled the first-time homebuyer programs MaineHousing offers to help you find the best option for your needs and situation.

The First Home Loan Program by MaineHousing offers low 30-year, fixed-rate mortgages with flexible down payment options, including the possibility of no down payment. The program covers a variety of property types, such as single-family homes, mobile homes and multi-unit properties (up to four units). Another key feature is the Maine HOPE program, which provides temporary payment protection for unemployed borrowers, offering them financial relief during difficult times.

The First Generation Program by MaineHousing is designed to help individuals who have never lived in a home owned by their biological parents or legal guardians, or those who were in foster care. It offers low fixed-rate mortgages with an exclusive 1% interest rate reduction.

Additionally, it provides up to $10,000 in financial assistance for down payments and closing costs. The program applies to various property types, including single-family homes and small multi-unit properties. Participants also benefit from Maine HOPE, which offers mortgage protection during unemployment.

The SaluteME Program by MaineHousing is designed to assist military members, veterans and retired service members in achieving homeownership at a more affordable price. This program offers a 0.50% interest rate discount on MaineHousing's First Home Loan, reducing eligible participants' monthly mortgage payments. In addition to low fixed-rate mortgages, SaluteME provides options for little or no down payment, making it easier for service members to purchase a home.

The program covers various property types, including single-family homes, mobile homes and multi-unit properties. Refunding is not permitted through this program, ensuring it remains focused on home purchases.

The Advantage Program by MaineHousing offers eligible borrowers up to $5,000 in down payment and closing cost assistance. This program requires specific mortgage products such as First Home and SaluteME. Notably, it does not necessitate a second mortgage, additional documentation or an increased loan amount. Assistance can be applied toward down payments, closing costs and prepaid escrow expenses. Borrowers must contribute at least 1% of the loan amount, which can be gifted, and there is no liquid asset test.

In Maine, zero-down-payment loan programs allow you to purchase a home without putting money down. USDA and VA loans are two government-backed options with no down payment requirement.

USDA loans are issued by the U.S. Department of Agriculture through its Rural Development Guaranteed Housing Loan program to assist low- to moderate-income families in rural areas in achieving homeownership.

USDA loans offer several benefits, including no down payment requirement and competitive interest rates, making them an attractive option for eligible buyers. The loans are intended for properties in designated rural areas, ensuring more families can access affordable housing. To qualify, the property must be a primary residence and meet specific standards.

Eligibility for USDA loans requires the property to be in a USDA-eligible rural area with a population of less than 35,000. Additionally, the home must be 2,000 square feet or less. Income limits vary based on location; for instance, in Somerset County, ME, the limit is $65,900, whereas in Knox County, ME, it is $73,300 for a four-person, low-income household. Understanding these criteria can help potential buyers determine if they qualify for a USDA loan.

VA loans, issued by the U.S. Department of Veterans Affairs, are designed to support veterans, active service members and eligible family members in buying homes. These loans provide a pathway to homeownership without a hefty down payment.

VA loans offer several advantages, including no-down-payment requirements and the absence of private mortgage insurance (PMI). They also typically feature lower interest rates compared to conventional loans, making them an attractive option for eligible borrowers. As of November 2024, the APR for a 15-year fixed-rate VA loan in Maine stands at 6.28%, while a 30-year fixed-rate VA loan is 6.56%.

To qualify for a VA loan, you must meet specific criteria, such as the length of service or service commitment, duty status and character of service. Additionally, income limits may apply depending on your location. A valid Certificate of Eligibility (COE) is also required to proceed with the loan application.

First-time homebuyers in Maine 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 at least a 3.5% down payment, making them accessible for buyers with less cash upfront. In contrast, conventional loans require as low as 3% down payment for first-time homebuyers but often have stricter credit score and debt-to-income ratio requirements. This means conventional loans might be more challenging to qualify for if your credit score is lower.

In November 2024, the current APR for a 15-year fixed-rate conforming loan in Maine is 5.98%, while the APR for a 15-year fixed-rate FHA loan is 8.07%. FHA loans can have higher APRs due to more fees and additional costs associated with borrowing money through government-backed programs.

To help you compare FHA and conventional mortgage programs and determine the best option, use our FHA vs. conventional loan calculator below.

We addressed frequently asked questions about first-time homebuyer programs in Maine to help you find the best option and move closer to homeownership.

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