Housing
This section of the BDN aims to help readers understand Maine’s housing crisis, the volatile real estate market and the public policy behind them. Read more Housing coverage here.
Rising prices and high mortgage rates have made buying a home in Maine, especially for the first time, more difficult in recent years.
Luckily, there are programs, grants and education resources in place to help hopeful buyers achieve homeownership.
Some communities, banks and credit unions, also offer their own local programs as well. Bangor, for example, offers a Homebuyer Program intended to help low-to-moderate income first-time buyers purchase, build or rehabilitate a home.
The assistance programs, some of which can be combined, typically help buyers cover down payments and closing costs and achieve lower interest rates on their mortgages, depending on their qualifications.
Here’s a list of the state and federal resources available to help people afford a home in Maine.
hoMEworks – homebuyer education classes
The nonprofit offers classes statewide that guide first-time buyers through every step of buying a home.
The classes take place either in person or online and teach students how to budget, avoid predatory lending and avoid foreclosure. The course costs $45 per person, and is a requirement for several state housing assistance programs.
MaineHousing – First Home Loan Program
The Maine State Housing Authority provides low fixed-rate 30-year mortgages for eligible buyers that have been used by more than 55,000 people, according to the agency’s website.
Interest rates through the program sat at roughly 5.5% as of May 21. The agency offers assistance options that help buyers afford closing costs and require no or little down payment.
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To be eligible for the program, someone must have not owned a home in the last three years, fall within income limits and the home they’re purchasing can’t exceed a certain price, depending on its location. They must also complete a hoMEworks homebuyer education class.
In Bangor, a household of one or two people can’t earn more than $103,400 annually and, if they’re buying a single-family home, the purchase price can’t exceed $525,000.
Loans are only offered through participating lenders, of which MaineHousing provides a list.
MaineHousing – Advantage
The agency’s Advantage offering, which can be tacked onto the First Home Loan Program, chips in $5,000 toward closing costs. Applicants must take the hoMEworks homebuyer education class before closing and make a minimum borrower contribution of 1% of the loan. The cost of the homebuyer education class counts towards the 1%.
MaineHousing – Salute ME
Active duty and retired military personnel can receive a .5% discount to MaineHousing’s First Home Loan 30-year fixed interest rate. Veterans who have previously owned a home can apply for similar benefits through the agency’s Salute Home Again program.
MaineHousing – First Generation Program
Someone who has never lived in a home owned by their parents or legal guardians, or has been in foster care at some point, might qualify for MaineHousing’s “First Gen” program. The program offers $10,000 in down payment and closing cost assistance and a 1% reduction on the agency’s First Home Loan interest rate, which now sits around 5.6%.
Aside from being a first-time homebuyer, applicants must meet income limits and have a credit score of at least 640 to access these benefits.
MaineHousing – Purchase Plus Improvement
If someone is buying a home that needs repairs, MaineHousing’s Purchase Plus Improvement option allows purchase and repair costs to be rolled into one loan. Eligible home improvement projects include energy efficiency upgrades, heating, plumbing, electrical systems, additions and general repairs.
If eligible, a buyer can include between $500 and $35,000 for repairs in their mortgage, as long as the cost of the home and the repairs do not exceed the program’s limits on home purchase prices.
FHA Loans
The Federal Housing Administration — part of the Department of Housing and Urban Development — can insure mortgage loans so a lender can offer a buyer a better deal.
This option has been in place since 1934 and can result in lower down payments and closing costs for buyers.
HUD also offers webpages of educational resources for first-time buyers and seniors.
VA Home Loans
The Department of Veterans Affairs offers home loan programs to veterans, active-duty servicemembers and eligible surviving spouses. These programs include one direct loan, in which the VA serves as the mortgage lender and three VA-backed loans.
The VA-backed loans are provided by private lenders, and the VA guarantees a portion of the loans, meaning it agrees to reimburse a lender in the event of loss due to foreclosure. This takes the place of a down payment, paves the way for lower interest rates and eliminates the need for Private Mortgage Insurance.
The Native American Direct Loan Program helps Native American Veterans buy, build, improve or refinance a home.
Veterans with certain disabilities related to their military service can also receive Adapted Housing Grants to either buy or update a home to be safe and accessible.
The VA Home Loans can also be used multiple times over the course of someone’s life. Further eligibility details based on an applicant’s service, credit score and income, as well as information on how to apply, are available on the VA website.
USDA Rural Development Loans
The U.S. Department of Agriculture offers direct and guaranteed loans for very low to moderate income families who want to buy or build a home in a rural area. Most of Maine qualifies as rural, except for some areas around Portland, Lewiston and Bangor.
The USDA’s Single Family Housing Direct Loan offers payment assistance to help low- and very-low-income applicants cover their mortgages for a short time.
Direct loan program applicants must be without safe housing, be unable to get a loan from other resources and fall within regional income limits, which are listed on the USDA website. Properties financed with the direct loan can’t have a market value above area limits. In Penobscot County, for example, a single family home can’t have a market value above $324,700.
The USDA’s Single Family Housing Guaranteed Loan Program provides full financing and promises to repay approved lenders 90% of a mortgage loan for low- and moderate-income borrowers in rural areas. This means eligible buyers don’t have to pay a down payment to purchase or build one.
Applicants for the program can’t exceed 115% of the area median household income and must plan to use the home they’re buying as their primary residence. Further details on the program’s requirements and how to apply are listed on the USDA’s website.
There are other USDA offerings for multifamily homes, as well as additional grants and loans for single-family homeowners who need to repair or improve their home.
