Wisconsin First-Time Home Buying Assistance Programs & Grants for 2024

Who Is Considered a First-Time Homebuyer in Wisconsin?

You are considered a first-time homebuyer in Wisconsin if you’ve never owned a home — or if you haven’t owned a home within the last three years. And, according to the U.S. Department of Housing and Urban Development (HUD), you also qualify as a first-time homebuyer if you are a single parent who has only owned a home with a partner while married or a displaced homemaker who has only owned a home with a spouse.

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5 Wisconsin Programs for First-Time Homebuyers

There are different types of mortgage loans and financial assistance programs for the first-time homebuyer in Wisconsin. Some may have income or credit score requirements.

1. WHEDA: Advantage Conventional Loan

The Wisconsin Housing and Economic Development Authority offers the Advantage Conventional Loan . The property you’re buying must be your primary residence for the life of the loan.

To qualify, you must have a credit score of 620 and meet income limits. You will also take a homebuyer education course.

2. WHEDA: Advantage FHA

This program is similar to the Advantage Conventional Loan — but you must have a credit score of at least 640 to qualify. To see if you are eligible, find a WHEDA lender .

3. WHEDA: Easy Close DPA

This down payment assistance program provides at least $1,000 and up to 6% of the purchase price of a home when partnered with a WHEDA Conventional first mortgage loan. It is a 10-year fixed-rate second mortgage with monthly payments.

To qualify, you must meet the income limits that apply to your WHEDA Conventional first mortgage.

4. WHEDA: Capital Access DPA

This down payment assistance program is similar to the Easy Close DPA, with a few notable differences. This is a 30-year 0% interest loan with no payments required. (The loan is paid in full when the first mortgage is paid off.) There are separate income limits, which are generally lower. Find out more about the program to see if you qualify.

5. City of Madison: Home-Buy the American Dream

Here’s an example of one of the financial assistance programs offered by individual cities in Wisconsin: Madison offers down payment and closing cost assistance in the form of a loan up to $35,000.

The home you’re buying must be in the city of Madison and be a single-family home, condo, or one-half of a duplex.

Payments are deferred until you sell or refinance the property. You are required to invest 1% in the transaction.

Recommended: First-Time Homebuyer Guide

How to Apply to Wisconsin Programs for First-Time Homebuyers

The state programs covered above have different criteria you must meet in order to qualify. Contact a participating lender to find out which programs are right for you.

It may also be helpful to run some numbers using an online mortgage calculator to see how much a loan might cost you. This can also help you think about how much house you can afford.

Federal Programs for First-Time Homebuyers

Several federal government programs are designed for people who have low credit scores or limited cash for a down payment. Although most of these programs are available to repeat homeowners, like state programs, they can be especially helpful to people who are buying a first home or who haven’t owned a home in several years.

The mortgages are generally for single-family homes, two- to four-unit properties that will be owner occupied, approved condos, townhomes, planned unit developments, and some manufactured homes.

Federal Housing Administration (FHA) Loans

The FHA, which is part of the U.S. Department of Housing and Urban Development (HUD), insures mortgages for borrowers with lower credit scores. Homebuyers choose from a list of approved lenders that participate in the FHA loan program. Loans have competitive interest rates and require a down payment of 3.5% of the purchase price for borrowers, who typically need FICO® credit scores of 580 or higher.

Worth noting: Those with lower credit scores (in the 500 to 579 range) must put at least 10% down.

In addition to examining your credit score, lenders will look at your debt-to-income ratio (DTI, your monthly debt payments compared with your monthly gross income). FHA loans may allow a DTI ratio of up to 57% in some cases, vs. a typical 45% to 50% maximum for a conventional loan.

Gift money for the down payment is allowed from certain donors and will be documented in a gift letter for the mortgage.

FHA loans always require mortgage insurance: a 1.75% upfront fee and annual premiums for the life of the loan, unless you make a down payment of at least 10%, which allows the removal of mortgage insurance after 11 years.

You can learn more about these loans, including FHA loans for refinance and rehab of properties, by reading up on FHA requirements, loan limits, and rates.

💡 Quick Tip: Backed by the Federal Housing Administration (FHA), FHA loans provide those with a fair credit score the opportunity to buy a home. They’re a great option for first-time homebuyers.¹

Freddie Mac Home Possible Mortgages

Very low- and low-income borrowers may make a 3% down payment on a Home Possible® mortgage. These loans allow various sources for down payments, including co-borrowers, family gifts, employer assistance, secondary financing, and sweat equity.

The Home Possible mortgage is for buyers who have a credit score of at least 660.

Once you pay 20% of your loan, the Home Possible mortgage insurance will be canceled, which will lower your mortgage payments. (Or, if you put down 20% as a down payment, you won’t have to pay any mortgage insurance.)

Fannie Mae HomeReady Mortgages

Fannie Mae HomeReady® Mortgages allow down payments as low as 3% for low-income borrowers and may offer a $2,500 credit to use toward down payment or closing costs for qualified individuals. Applicants generally need a credit score of at least 620; pricing may be better for credit scores of 680 and above. Like the Freddie Mac program, HomeReady loans allow flexibility for down payment financing, such as gifts toward a mortgage and grants.

For income limits, a comparison to an FHA loan, and other information, go to this Fannie Mae site .

Fannie Mae Standard 97 LTV Loan

The conventional 97 LTV loan is for first-time homebuyers of any income level who have a credit score of at least 620 and meet debt-to-income criteria. The 97% loan-to-value mortgage requires 3% down. Borrowers can get down payment and closing cost assistance from third-party sources.

Unlike an FHA loan, the 97 LTV loan has no upfront mortgage insurance fee, though it does have cancellable mortgage insurance. The loan is for just one-unit single-family homes, co-ops, condos, and planned unit developments which you will live in.

Department of Veterans Affairs (VA) Loans

Active-duty members of the military, veterans, and eligible family members may apply for loans backed by the Department of Veterans Affairs. VA loans, which can be used to buy, build, or improve homes, have lower interest rates than most other mortgages and don’t require a down payment. Most borrowers pay a one-time funding fee that can be rolled into the mortgage.

Another benefit of VA loans is that they do not require private mortgage insurance (PMI) for borrowers who make a down payment of less than 20%. And they have more flexible credit score requirements. In some cases, even those who have previously been in foreclosure or bankruptcy can qualify.

Borrowers applying for a VA loan will need a Certificate of Eligibility from the VA so make sure to review a guide to qualifying for a VA loan as a first step in the process.

Native American Veteran Direct Loans (NADLs)

Eligible Native American veterans and their spouses may use these no-down-payment loans to buy, improve, or build a home on federal trust land. Unlike VA loans listed above, the Department of Veterans Affairs is the mortgage lender on NADLs. The VA requires no mortgage insurance, but it does charge a funding fee. Find out more by emailing [email protected].

US Department of Agriculture (USDA) Loans

No down payment is required on these loans to moderate-income borrowers that are guaranteed by the USDA in specified rural areas. Borrowers pay an upfront guarantee fee and an annual fee that serves as mortgage insurance.

The USDA also directly issues loans to low- and very low-income people. For loan basics and income and property eligibility, head to this USDA site .

HUD Good Neighbor Next Door Program

This program helps police officers, firefighters, emergency medical technicians, and teachers qualify for mortgages in the areas they serve. Borrowers can receive 50% off a home in what HUD calls a “revitalization area.” They must live in the home for at least three years.

Wisconsin First-Time Homebuyer Stats for 2024

Want a better picture of how you stand as a first-time homebuyer? Consider these figures:

•  First-time homebuyers in the U.S.: 50% of all homebuyers

•  Median age of first-time homebuyers in U.S.: 36

•  Median home price in Wisconsin: $274,400

•  Average down payment in Wisconsin: 14.6%

•  Average credit score of homebuyer in Wisconsin: 732

Financing Tips for First-Time Homebuyers

In addition to federal and state government-sponsored lending programs, there are other financial strategies that teach you how to lower your mortgage payment:

•  Traditional IRA withdrawals. The IRS allows qualifying first-time homebuyers a one-time, penalty-free withdrawal of up to $10,000 from their IRA if the money is used to buy, build, or rebuild a home. The IRS considers anyone who has not owned a primary residence in the past three years a first-time homebuyer. You will still owe income tax on the IRA withdrawal. If you’re married and your spouse has an IRA, they may also make a penalty-free withdrawal of $10,000 to purchase a home. The downside, of course, is that large withdrawals may jeopardize your retirement savings.

•  Roth IRA withdrawals. Because Roth IRA contributions are made with after-tax money, the IRS allows tax- and penalty-free withdrawals of contributions for any reason as long as you’ve held the account for five years. You may also withdraw up to $10,000 in earnings from your Roth IRA without paying taxes or penalties if you are a qualifying first-time homebuyer and you have had the account for five years. With accounts held for less than five years, homebuyers will pay income tax on earnings withdrawn.

•  401(k) loans. If your employer allows borrowing from the 401(k) plan that it sponsors, you may consider taking a loan against the 401(k) account to help finance your home purchase. With most plans, you can borrow up to 50% of your 401(k) balance, up to $50,000, without incurring taxes or penalties. You pay interest on the loan, which is paid into your 401(k) account. You usually have to pay back the loan within five years, but if you’re using the money to buy a house, you may have up to 25 years to repay.

•  State and local down payment assistance programs. Usually offered at the regional or county level, these programs provide flexible second mortgages for first-time buyers looking into how to afford a down payment.

•  The mortgage credit certificate program. First-time homeowners may claim a portion of their mortgage interest as a tax credit, up to $2,000. Any additional interest paid can still be used as an itemized deduction.

To qualify for the credit, you must be a first-time homebuyer, live in the home, and meet lower income and purchase price requirements, which vary by state. If you refinance, the credit disappears, and if you sell the house before nine years, you may have to pay some of the tax credit back. There are fees associated with applying for and receiving the mortgage credit certificate that vary by state. Often the savings from the lifetime of the credit can outweigh these fees.

•  Your employer. Your employer may offer access to lower-cost lenders and real estate agents in your area, as well as home buying education courses.

•  Your lender. Always ask your lender about any first-time homebuyer grant or down payment assistance programs available from government, nonprofit, and community organizations in your area.

The Takeaway

The housing market in Wisconsin is competitive, but there are programs that can help first-time homebuyers save on a mortgage and down payment costs, as long as they qualify. Federal-backed and conventional loans are also worth exploring.

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