By Grant Edrington – Updated April 3, 2023
Are you ready to become a first-time homeowner in Missouri? Although home prices in Missouri are relatively lower than the national average, saving enough money for a down payment and closing costs can still be a significant challenge for first-time homebuyers. However, there’s good news for Missourians looking to take the plunge into homeownership in 2023. The Missouri State Government offers a range of programs and grants that can help eligible first-time homebuyers overcome financial obstacles and secure their dream home.
From cash assistance to special mortgages and mortgage credit certificates, it’s important to understand what Missouri has to offer for first-time homebuyers in 2023.
Ready to see what Divvy can do for you? Explore Our Rent-to-Own Homes in St. Louis, Missouri.
Shopping for your first home in another state? Check out our full first-time homebuyer program guide here.
First-Time Homebuyer Eligibility in Missouri
Who’s considered a first-time homebuyer in Missouri? According to the Missouri Housing Development Commission (MHDC):
- First-time homebuyers are defined as people who have not owned a home or had an ownership interest in a primary residence within the past three years.
- If you are a qualified veteran, you do not have to be a first-time homebuyer to qualify for Missouri’s First Place or Mortgage Credit Certificate loan programs.
2023 Missouri Homebuyer Statistics
To help give you an idea of homebuying conditions in Missouri, the most recent data available dates to 2022, showing some changes from the prior year.
- In January 2023, the median sales price for a home statewide was $220,200.
- The median time Missouri homes stayed on the market in 2022 was 79 days. This stayed consistent with 2021 numbers for a home’s time on the market in The Show-Me State.
- As of August 2022, Missouri had a REALTORS® Affordability Score of 0.84 (with 1.00 being the most affordable). This is more affordable than the national average score of 0.64.
MHDC’s First Place Loan Program
The Missouri Housing Development Commission offers several first-time homebuyer programs, such as MHDC’s First Place Loan Program, to help individuals and families purchase their first home. These programs aim to make homeownership more accessible and affordable by providing low-interest loans, down payment assistance, and tax credits.
You can also find resources at Divvy’s Guide to Home Buying Assistance Programs to help make your dream of home ownership a reality.
Non-Cash Assistance Loan to Reduce Interest Rates
The Non-Cash Assistance Loan is a program that offers lower interest rates to first-time homebuyers who do not require financial assistance with down payment or closing costs. Qualified applicants are eligible for better interest rates compared to those who opt for the Cash Assistance Loan Program, resulting in reduced monthly payments. However, it’s important to note that this program does not provide any form of down payment or closing cost assistance, and junk fees are not permitted. While the lender may charge standard closing costs, this loan does not require any additional fees.
Cash Assistance Loan for Down Payments and Closing Costs
The Cash Assistance Loan program is designed to provide financial assistance to first-time homebuyers in the form of cash for down payment and closing costs. Eligible applicants can receive a forgivable second mortgage equivalent to 4% of the loan amount, which can be used towards down payment and closing costs.
If the borrower remains in the home/loan for 10 years, the second mortgage will be completely forgiven. Additionally, the second mortgage will gradually diminish after year five, decreasing by 1/60 every month until year 10. Keep in mind that this program does not permit any junk fees, but standard closing costs may be charged by the lender.
MHDC’s Next Step Program
If you’re looking for financial assistance to purchase your home, the Next Step Program in Missouri offers a viable solution. This program is available to both first-time and non-first-time homebuyers who exceed the income limits of the First Place Program. With higher income and purchase price limits, borrowers have the opportunity to receive cash assistance for down payment and closing costs.
The loan options include a first mortgage through MHDC with a 30-year fixed rate, where rates are updated daily, and borrowers can choose from FHA/VA/RD or conventional loans (with higher rates for conventional loans). Down payment assistance is also available, and the Next Step Program may utilize the Mortgage Credit Certificate (MCC) Program to further assist borrowers in their homebuying journey.
MHDC’s Mortgage Tax Credit Certificate
The MCC Program offers income-eligible first-time homebuyers a unique opportunity to minimize their annual federal income tax obligation while owning and residing in their homes. The program enables eligible borrowers to receive a non-refundable federal tax credit equivalent to 25% of their total mortgage interest payments each year. By providing this tax credit, the program empowers prospective homebuyers to secure competitive mortgage financing in a market with many options.
Down Payment Assistance Programs in St. Louis, Springfield and Beyond
If you’re struggling to come up with a down payment, there are helpful programs available in St. Louis, Springfield, and other areas in Missouri. These programs can help make homeownership more accessible and affordable by providing financial assistance for down payments.
St. Louis County’s Down Payment Assistance Program
Qualified homebuyers in St. Louis County can receive financial assistance in the form of 0% interest, five-year forgivable loans. To be eligible, you’ll need to meet the following:
- Complete homebuyer education and one-on-one counseling with a partnering housing counseling agency to achieve “Homeownership Ready” status
- Have at least $1,000 of personal funds
- Secure a fixed-rate mortgage on the purchased home
- Household income can’t exceed 80% of the median income in the area
Springfield’s Down Payment Assistance Program
Springfield homebuyers can qualify for a loan of up to $9,000 that carries no interest or payments. The loan will be forgiven over 10 years as long as the property remains your primary residence. To be eligible, you must be pre-qualified for a qualified first mortgage and the purchased home can’t exceed $150,000 and must be located within the designated target area.
Other City and County Programs Throughout Missouri
As you research the homebuying process in Missouri, be sure to look into down-payment assistance programs in your own city or county. There may be additional programs available to help you achieve your dream of homeownership. These programs can make a significant difference in making your home purchase more affordable, so take some time to research what’s available in your area.
- Blue Springs’ First Time Home Buyer Program
- Columbia’s Homeownership Assistance Program
- Florrisant’s Down Payment Assistance Program
- O’Fallon’s Down Payment Assistance Program
- St. Charles County’s Down Payment Loan Program
Discover the Benefits of Using Divvy to Purchase Your First Home
If you’re a first-time homebuyer in Missouri but may not qualify for a traditional mortgage right away, Divvy is another option to consider. While Divvy isn’t an immediate path to a home purchase, we can help prepare you for homeownership through our rent-to-own program. Depending on your homeownership goals, you can choose to contribute a portion of your monthly rent toward your eventual down payment savings. Here are some of the perks:
- Home selection: With our rent-to-own program, Divvy customers can choose almost any home on the market, as long as it meets our qualifications and fits within your approved budget range.
- Eligibility: Divvy often has more flexible requirements compared to traditional mortgage lenders, as our goal is to help you improve your credit score and other financials while you rent with us and prepare to purchase your home. We’re also a great fit for self-employed or contractor employees who may have difficulty getting approved for a traditional mortgage.
- Offering power: Divvy gives you the power of an all-cash offer, which can often set you apart from other buyers.
- Flexibility: With Divvy, you’re never locked into a home. If you want to try before you buy, Divvy could be a great option and lets you walk away from the program with your accumulated savings (minus any relisting fees or damage-related costs).
Learn more about Divvy and how it works.
Note: Divvy is not affiliated with the first-time homebuyer programs mentioned in this article. Be aware that requirements for these programs may change. We recommend consulting with a lender or real estate agent when evaluating first-time home buyer programs.
Missouri First-Time Homebuyer FAQs
How much is a down payment on a house in Missouri?
A down payment on a house in Missouri typically ranges from 3.5% for first-time home buyers to up to 20% of the purchase price. Using the 2022 average sales price for a home in Missouri ($170,000), aspiring homeowners may need to have between $5,950 and $34,000 as a downpayment on their future home.
What program is best for first-time homebuyers in Missouri?
There are several programs available depending on your needs. The Missouri Housing Development Commission (MHDC) is an excellent place to start. The Homebuyer’s Resource Guide is also a great resource for first-time homebuyers in Missouri, as it helps you understand the process and determine if your financial resources will allow you to buy a home.
Is there a first-time homebuyer tax credit in Missouri?
The Mortgage Credit Certificate (MCC) program offers income-eligible first-time homebuyers a chance to lower their federal income tax liability while owning and residing in their homes. Eligible borrowers can claim a non-refundable federal tax credit of 25% of their annual mortgage interest payments through this program. By reducing the amount of federal income tax owed each year, the MCC can help qualified buyers secure mortgage financing in a competitive housing market, making homeownership more accessible and affordable.
What does your credit score have to be to buy a house in Missouri?
Credit score requirements can vary depending on the lender or program you choose. For example, to qualify for an FHA loan, you need a minimum credit score between 500 and 580. Some lenders may require a minimum score of 620.
- Missouri Housing Development Commission (https://mhdc.com/services/homeowners/)
- Missouri Real Estate Statistics (https://www.statisticstats.com/real-estate/missouri-real-estate-statistics/)
- Redfin: Missouri Housing Market (https://www.redfin.com/state/Missouri/housing-market)
- St. Louis County’s Down Payment Assistance Program (https://stlouiscountymo.gov/st-louis-county-departments/human-services/community-development/home-down-payment-assistance-flyer/)
- City of Springfield Down Payment Assistance (https://www.springfieldmo.gov/685/Down-Payment-Assistance)
Grant is a member of the marketing team and focuses on connecting aspiring homeowners in our metros with Divvy. He's worked on marketing teams spanning all parts of the homeownership journey, including home loans, power tools and home improvement, siding and flooring, and now Divvy. Grant graduated from Villanova University and became a homeowner in 2021.