Homebuyers have been clamoring for a piece of Maine. The state’s residential real estate market shattered records in 2020, hitting its highest median sale price in more than two decades. While that might mean there’s a lot of competition out there for first-time homebuyers, there are also several assistance programs available to help level the playing field.
The Maine State Housing Authority, known as MaineHousing, connects first-time buyers with loan options and assistance programs to help make homeownership more affordable. In Maine, you’re considered a first-time buyer if you haven’t owned a home in the past three years.
Maine first-time homebuyer loan programs
MaineHousing offers 30-year mortgages with low fixed rates and little to no down payment. For first-time homebuyers, options include:
MaineHousing First Home Loan Program
MaineHousing’s First Home Loan Program provides first-time homebuyers with 30-year, fixed-rate mortgages, either as a conventional, FHA, VA or USDA loan. There is little to no down payment required with many of these options. You can couple this mortgage with MaineHousing’s down payment and closing cost assistance program, dubbed Advantage, to maximize savings.
The First Home Loan Program offers zero- and two-discount point interest rate options, with each point equaling 1 percent of the amount borrowed. You can pay points upfront to lower your interest rate.
First Home Loan mortgages also include payment protection in case you lose your job. Through Maine HOPE (“Home Ownership Protection for unEmployment”), borrowers in good standing who become unemployed can receive an advance of up to four mortgage payments, including taxes and homeowners insurance. The payments are packaged as a no-interest junior lien that only needs to be repaid when the home is sold or the first mortgage is paid off.
- 640 minimum credit score
- Must meet MaineHousing income limits
- Must be a single-family home, two- to four-unit owner-occupied apartment building, condominium or mobile home
- Must meet MaineHousing purchase price limits
Since MaineHousing mortgages are financed with mortgage revenue bonds, you might be subject to a federal recapture tax. That means if you sell your home within nine years of buying it and make a profit on the sale, and your income has risen significantly, the feds could tax a portion of the money you saved by having a MaineHousing mortgage. As of 2013, those who do pay this tax might qualify for a reimbursement from MaineHousing.
MaineHousing Salute ME
Through MaineHousing’s Salute ME program, active-duty, veteran and retired military members can qualify for a 0.25 percent discount on a First Home 30-year fixed-rate mortgage. As with the First Home loan program, borrowers must meet income and purchase price limits to qualify.
The agency waives the first-time homebuyer requirement for participants in the program, but borrowers must either remain on active duty for 180 days or within a war zone, or have been honorably discharged from military service. National Guard members who meet the requirements are eligible, as well.
MaineHousing Self-Insurance for Mobile Homes
MaineHousing’s Self-Insurance for Mobile Homes option offers mortgages for first-time homebuyers of a single- or double-wide home on owned or leased land. Through this program, the agency self-insures mobile home loans with a loan-to-value (LTV) ratio between 80 percent and 95 percent. In exchange, borrowers pay a higher interest rate, rather than pay for mortgage insurance.
- 5 percent down payment (at least 3 percent must come from your own funds)
- 640 minimum credit score
- Maximum 43 percent debt-to-income ratio
- Must be a permanently attached mobile home built within the last 20 years (an unattached mobile home on leased land could qualify)
- Must not use more than 15 percent of the property for business purposes
- Maximum $175,000 purchase price
MaineHousing Purchase Plus Improvement Program
MaineHousing’s Purchase Plus Improvement (PPI) Program allows you to finance a home purchase and repairs with a single mortgage, provided the cost of the home and the repairs doesn’t exceed First Home Loan purchase price limits.
The PPI loan allows for $500 to $35,000 in financing for certain kinds of home improvements, including adding a garage or making energy-efficiency upgrades. The loan cannot be used for improvements like adding a deck or swimming pool. The work must begin within 30 days of closing the loan and be complete within six months (180 days) of closing.
MaineHousing Indian Housing Mortgage Insurance Program
For Native Americans living on tribal reservations, it can be challenging to obtain a mortgage because of land-use or ownership restrictions that can make it more difficult to insure a loan. While not a loan in and of itself, MaineHousing’s Indian Housing Mortgage Insurance Program provides mortgage insurance for loans for property on tribal land, which removes some of the lending risk. The eligibility requirements for this program include:
- Borrower must appear on the annual census of the Passamaquoddy Tribe or Penobscot Nation, and property must be on the Penobscot Tribal Reservation, the Indian Township Passamaquoddy Reservation or the Pleasant Point Passamaquoddy Reservation
- Borrower must meet credit, debt-to-income ratio and employment requirements
- Financing must be to either buy or improve an existing or manufactured home or build a new home (or, for current homeowners, to refinance to a lower rate)
- Borrower must have funds for closing costs
Maine down payment assistance
Down payment assistance is available to MaineHousing borrowers who need help covering these costs.
Through the MaineHousing Advantage down payment and closing cost assistance program, qualifying homebuyers can receive up to $3,500 in cash toward a down payment or closing costs. To be eligible, the borrower:
- Must combine the assistance with a MaineHousing loan program (zero-point program only)
- Must complete a homebuyer education course
- Must contribute at least 1 percent of the loan amount to the purchase; the cost of the homebuyer education course applies to the 1 percent
Other first-time homebuyer loan programs
In addition to MaineHousing programs, government mortgages such as FHA, VA and USDA loans offer terms and rates that can make it easier for first-time homebuyers to purchase a home. Your mortgage lender can point you to other specialized loans and assistance options, as well. Bankrate’s first-time homebuyer loans and programs guide can give you more insight into what other programs might be available to you.
For other Maine homeownership programs, including by city, visit HUD.gov.
Once you have a handle on the first-time homebuyer loan and down payment assistance programs out there, an approved MaineHousing mortgage lender can guide you through the application process and help you find the options that best fit your situation. Terms and interest rates vary by lender, so it’s important to compare loan options carefully.