Living in Alaska can pay off — literally. If you’re considering where to buy your first home, one of the most unique perks of living in The Last Frontier is its Permanent Fund Division, which pays dividends to residents based on the state’s earnings from mineral royalties.
You’ll also avoid a hefty tax bill thanks to a lack of state income tax, so you can spend less time stressing about finances and more time enjoying what makes the state so attractive: the outdoors.
Of course, you’ll need a place to retreat to, as well. Homes in Alaska came with a median sale price of just over $301,000 as of early 2021, according to real estate brokerage Redfin. If you’re a first-time homebuyer in the state and need help pulling together that kind of cash, consider turning to the Alaska Housing Finance Corporation, also known as Alaska Housing. The organization’s programs work in conjunction with conventional, FHA, VA and USDA loans, and include low interest rates and down payment assistance to help you more easily afford a home.
Alaska first-time homebuyer loan programs
Alaska Housing First Home Limited
If you haven’t owned a home in the last three years, you’re considered a first-time homebuyer, and Alaska Housing’s First Home Limited program can help you score a low interest rate.
- 5 percent down payment on conventional loan
- 620 minimum credit score
- Must meet Alaska Housing income limits, which depend on location of property and size of household (limits may be higher in targeted areas)
- Must read Alaska Housing’s educational booklet on homebuying and homeownership
- Can be a single-family home, condominium, common-interest community unit, duplex or certain manufactured homes
- Must meet Alaska Housing purchase price limits, which vary based on location and type of home
While not a requirement for eligibility, you should also consider taking the HomeChoice educational course. It’s free, and it can save you $250 in closing costs.
Alaska Housing First Home
If you’re a first-time homebuyer in Alaska but your income exceeds the First Home Limited program limits, or you’re looking to purchase a more expensive home, the First Home program might be the right fit for you. As its name implies, it eliminates those limits while still allowing you to lock in a competitive interest rate.
Additional opportunities to save
Alaska Housing has two other options that might be able to save you some extra cash:
- Low-Income Interest Rate Reduction – If your income falls under 80 percent or 60 percent of the median income in the area where you’re buying, you could qualify for either 0.5 percent or 1 percent off your interest rate on the first $180,000 of your mortgage. That savings can add up in a big way over a 30-year loan.
- Energy Efficiency Rate Reduction – If you purchase a new home that exceeds the Alaska Building Energy Efficiency Standards, you might be able to get a reduced interest rate on the first $200,000 of your mortgage. You might also qualify for rate reductions if you’re buying a preowned home, or making energy-efficiency improvements to one. Be sure to keep this in mind when comparing homes for sale — in general, energy efficiency translates to lower utility costs.
Alaska down payment assistance
Alaska Housing Closing Cost Assistance
This Alaska Housing program is called “Closing Cost Assistance,” but the funds can apply to your down payment, too. Depending on your credit, you can borrow between 3 percent and 4 percent of the home’s purchase price through this 30-year, fixed-rate assistance loan. FHA, VA or USDA loans are eligible for this program, and the only requirement is a credit score of at least 640.
Alaska Housing Affordable Housing Enhanced Loan Program (AHELP)
The Affordable Housing Enhanced Loan Program (AHELP) offers down payment assistance via a number of organizations throughout Alaska. Many of the assistance options come in the form of a second mortgage with a fixed interest rate, but there are also some grant options that don’t need to be repaid at all. For example, the North Pacific Rim Housing Authority offers eligible Alaska Native and American Indians grants of up to $40,000 that can be forgiven after 15 years.
It’s smart to compare all of the AHELP options to see which programs can be the most cost-effective for you.
Local homebuyer assistance programs
Depending on where you’re looking to buy your first home in Alaska, you might have access to other local assistance options. In Fairbanks, for example, the nonprofit Fairbanks Neighborhood Housing Services offers two down payment assistance programs for qualified buyers who can contribute at least $1,000 of their own funds to the purchase.
If you’re willing to do some of the work of building a home, Rural Alaska Community Action Program’s Mutual Self-Help Housing initiative offers low-income residents the chance to buy a home with no down payment in exchange for sweat equity. Be prepared to work at least 35 hours per week building new homes in order to be eligible.
Other first-time homebuyer loan programs
If you don’t find an Alaska state program that suits your needs, you can look for nationally-available assistance. You can use Bankrate’s guide to first-time homebuyer loans and programs to discover other ways to make buying a home more affordable.
For other Alaska homeownership programs, including by city, visit HUD.gov.
Are you ready to buy your first home in The Last Frontier? You can start by determining if your income and budget are a match for Alaska Housing’s First Home Limited program, then browse participating mortgage lenders. Keep in mind that, whether you use a state housing finance agency program or otherwise, each bank, credit union and lender provides different loan offers and terms. It’s important to compare mortgage rates and calculate your estimated monthly payments so you can lock in an offer that fits your financial needs.
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