First-Time Homebuyer Programs in Missouri

The down payment on a new home often presents the biggest hurdle for first-time homebuyers. In Missouri, where the average home value is $247,482, a down payment of $49,496 is needed to avoid private mortgage insurance.

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

Missouri offers grants and loans to help first-time homebuyers cover both down payment and closing costs. We compiled the first-time homebuyer programs Missouri Housing Development Commission (MHDC) offers to help you find the best option for your particular needs and situation.

The First Place Program from MHDC provides affordable mortgage financing for first-time homebuyers or qualified veterans with interest rates lower than typical market rates. It also offers a forgivable second loan for down payment and closing costs, up to 4% of the total mortgage amount. This second loan is 100% forgivable after 10 years if the borrower maintains the mortgage and continues occupying the home. The program supports FHA, VA, USDA and conventional loans, but refinanced mortgage loans are not eligible.

The Next Step Program is designed for both first-time and repeat homebuyers who exceed the income limits of the First Place Program. It offers higher income and purchase price limits, making it a good option for buyers with higher earnings. The program provides a 30-year fixed-rate mortgage and offers up to 4% of the loan amount in forgivable down payment assistance. This second loan is forgivable over a 10-year period if the borrower stays in the home. Homebuyers with sufficient savings can opt for a lower interest rate without down payment assistance, reducing monthly mortgage payments.

With the Mortgage Credit Certificate (MCC), eligible borrowers can claim a tax credit of up to 45% of their annual mortgage interest, up to a maximum of $2,000 per year. This credit effectively reduces their tax liability, lowering the overall cost of owning a home. MCCs can be paired with the Next Step Program, providing additional savings through lower interest rates and potential down payment assistance. The credit can be applied every year as long as the borrower remains in the home and maintains the mortgage, making it a long-term benefit for qualifying buyers. This program applies to various mortgage types, including FHA, VA, USDA and conventional loans.

Aside from statewide first-time homebuyer programs in Missouri, city-specific programs are available to help you pursue homeownership in a city of your choosing. Check out the table below for some of the cities in Missouri that provide first-time homebuyer programs for potential residents.

Zero-down-payment loan programs in Missouri allow you to purchase a home without putting money down. USDA and VA loans are two government-backed options that come with no down payment.

USDA loans are a viable option for homebuyers planning to purchase in rural areas. The U.S. Department of Agriculture issues the USDA loan through its Rural Development Guaranteed Housing Loan program. These loans cater to low-to-moderate-income individuals who aspire to own a home but may not have the means for a traditional loan.

USDA loans offer several benefits, including no down payment requirements and competitive interest rates. They are designed to make homeownership accessible to those in eligible rural areas. The loans cover 100% of the purchase price, reducing the financial burden on the homebuyer. Additionally, the interest rates are often lower than conventional loans, making monthly payments more manageable.

To qualify for a USDA loan, certain eligibility requirements must be met. Your property must be 2,000 square feet or below and located in a USDA-eligible rural area with a population of less than 35,000. Additionally, you must meet specific income limits, which vary by location. For instance, in Barry County, MO, the income limit for a four-person household is $57,200, while in Camden County, MO, it is $65,350. Understanding these requirements can determine if a USDA loan is the right fit for your homebuying needs.

VA loans are a financing option issued by the U.S. Department of Veterans Affairs for eligible veterans, service members, and their families. These loans help those who have served in the military purchase homes with favorable terms.

One of the main benefits of VA loans is the no-down payment requirement, which can make homeownership more accessible. Additionally, VA loans do not require private mortgage insurance (PMI), reducing monthly costs. They also typically offer lower interest rates compared to private loans. As of November 2024, the APR for a 15-year fixed-rate VA loan in Missouri is 6.21%, while a 30-year fixed-rate loan stands at 6.36%.

To qualify for a VA loan, you must meet specific eligibility criteria, including length of service, duty status and character of service. Additionally, you must meet certain income limits that vary by location. A valid Certificate of Eligibility (COE) is also required to apply for a VA loan.

First-time homebuyers in Missouri 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 available. FHA loans require a minimum down payment of 3.5%, while conventional loans can require as low as 3% for first-time homebuyers. However, conventional loans typically demand higher credit scores and stricter debt-to-income ratio requirements than FHA loans.

As of November 2024, the APR for a 15-year fixed-rate conforming loan in Missouri is 6.12%. In contrast, the APR for a 15-year fixed-rate FHA loan is 8.09%. The APRs on FHA loans can be higher due to additional fees and costs associated with borrowing money on government-backed loans.

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

We have answered frequently asked questions about first-time homebuyer programs in Missouri to help you find the best option and move closer to achieving homeownership.

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