First-Time Homebuyer Programs in Mississippi

The down payment on a new home is often the biggest hurdle for first-time homebuyers. The average home value in Mississippi is $179,894, requiring a down payment of $35,979 to avoid private mortgage insurance.

Fortunately, first-time homebuyer programs in Mississippi can 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 need mortgage insurance. MoneyGeek explores several state-specific and government-backed first-time homebuyer programs for people from different financial backgrounds.

Mississippi offers grants and loans to assist first-time homebuyers with down payment and closing costs. We have compiled the first-time homebuyer programs Mississippi Home Corporation (MHC) offers to help you find the best option for your needs and situation.

Smart6 provides homebuyers a 30-year fixed-rate mortgage with $6,000 in down payment or closing cost assistance as a second lien. This assistance is interest-free and payable upon sale, refinancing or when the first mortgage is fully paid. Smart6 can be used with FHA, VA, Rural Development or conventional loans. It can also be combined with the Mortgage Credit Certificate (MCC) program for additional tax benefits.

MHC's Easy8 program provides $8,000 in assistance for down payment and closing costs through a 30-year fixed-rate mortgage. This assistance comes with a 0% interest second mortgage, due when the home is sold, refinanced, rented out or when the first mortgage is fully paid off. The program supports various loan types, including FHA, VA, Rural Development and conventional loans. There is no limit on liquid assets for applicants.

The Trusty10 program provides $10,000 in down payment and closing cost assistance through a second mortgage with a 2% fixed interest rate. The second mortgage has a 15-year term and can be used alongside FHA, VA, Rural Development and Fannie Mae/Freddie Mac loans. Additionally, the assistance has no liquid asset limit.

The Mortgage Credit Certificate (MCC) program helps homebuyers reduce their federal income tax liability. It provides a tax credit equal to 40% of the annual mortgage interest paid, up to $2,000 annually. This credit is a dollar-for-dollar reduction, allowing more take-home pay or tax savings, which makes homeownership more affordable. The remaining 60% of the interest qualifies as a standard tax deduction.

It can be used with loans like FHA, VA, Rural Development and conventional mortgages. Additionally, it can be combined with MHC’s Smart6 program at a 30-year fixed rate or used as a stand-alone product with mortgage terms of 15, 20, 25 or 30 years.

In Mississippi, zero-down-payment loan programs allow you to purchase a home without putting money down. USDA and VA loans are two government-backed options that offer this benefit.

USDA loans help individuals and families purchase homes in rural areas. Issued through the USDA loans program by the U.S. Department of Agriculture, these loans aim to improve access to homeownership for those who might not qualify through traditional means.

USDA loans provide several benefits, including no down payment requirements, competitive interest rates and reduced mortgage insurance costs. These loans make homeownership more affordable for eligible rural and suburban homebuyers. The program supports those needing more financial resources for a conventional mortgage, offering a path to homeownership that might otherwise be out of reach.

To qualify for a USDA loan, your property must be located in a designated rural area with a population of less than 35,000 and must be 2,000 square feet or less. Additionally, applicants must meet specific income limits, which vary based on location. For instance, in Alcorn County, MS, the income limit for a four-person, low-income household is $51,350, while in Greene County, MS, it is $55,700. Understanding these requirements is essential for determining eligibility and taking advantage of USDA loan benefits.

VA loans offer specialized financing for veterans and service members looking to purchase a home. The U.S. Department of Veterans Affairs issues these loans to facilitate homeownership for those who have served in the military.

VA loans offer several benefits, including no-down-payment requirements, which can make homeownership more accessible. Additionally, there is no need for private mortgage insurance (PMI), potentially saving borrowers hundreds of dollars monthly. These loans also come with lower interest rates than many private loans. As of November 2024, the APR for a 15-year fixed-rate VA loan in Mississippi is 6.14%, while a 30-year fixed-rate VA loan is 6.19%.

To qualify for a VA loan, you must meet specific eligibility requirements. These include your length of service or service commitment, duty status, and character of service. Income limits also apply and vary depending on where you live. A valid Certificate of Eligibility (COE) is necessary to proceed with a VA loan application.

First-time homebuyers in Mississippi 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 often compared as they are the two most common types of mortgages. FHA loans require a minimum down payment of 3.5%, making them accessible for borrowers with limited savings. Conventional loans, on the other hand, may require as low as 3% down for first-time homebuyers. However, conventional loans typically demand stricter credit score and debt-to-income ratio requirements, making them less accessible to some borrowers.

Interest rates also vary between these loan types. As of November 2024, the APR for a 15-year fixed-rate conforming loan in Mississippi is 6.01%. In contrast, the APR for a 15-year fixed-rate FHA loan is 8.04%. FHA loans often have higher APRs because they include more fees and additional costs associated with government-backed loans.

Use our FHA vs. conventional loan calculator below to compare FHA and conventional mortgage programs and determine the best option for you.

We answered frequently asked questions about first-time homebuyer programs in Mississippi to help you identify the best option and move closer to homeownership.

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