If nothing on the market sparks your fancy, or if you’re tired of renting properties that seem to require maintenance calls every other month, the idea of a new construction home may appeal to you. After all, brand new homes don’t have the typical repair issues that older homes have, plus they come with all the modern amenities on your wish list.

But how do you get a new construction home if you don’t have enough cash for closing costs and a down payment? If you’re borderline on qualifying for a home loan and need a leg up, then you will be delighted to know that the federal government and your state have programs to assist people like you in achieving the dream of homeownership.

First Things First: Start With Federal Programs

Before you check out what your state can offer, you can cover a lot of ground by exploring loans and incentives backed by the federal government.

For example, if you are a first-time buyer, you can apply for a new construction loan through the Federal Housing Administration, which offers lower down payment requirements, reduced interest, and fee limitations.

If you served in the military, you may qualify for a VA loan from the Department of Veterans Affairs, which allows you to put 0% down!

Another option for 0% down is if you find a qualifying property through an RD loan through the U.S. Department of Agriculture (USDA).

If you prefer a conventional loan, understand that the qualifications will be steeper because government funds don’t back this loan option. The minimum down payment for a conventional new construction loan is 20%, which first-time buyers don’t typically have without equity.

  • Another thing to note: The federal government also offers a mortgage tax credit certificate (MCC)to qualified homebuyers, which lowers your federal tax bill and makes affording a new home more manageable. This major perk is available for up to 30 years after you buy your home (as long as you don’t refinance or sell). You MUST ask your lender about this credit to get the certificate, or else you’ll miss it!

When you combine the benefits of federal loans with state assistance and grants, you can lower your out-of-pocket expenses and total loan amount.

Next, Check Your State For Closing Cost Assistance

Every state has unique programs that can help homebuyers access funds to supplement closing costs and down payments. Instead of reinventing the wheel, let’s give credit to The Mortgage Reports for making this incredible list of homebuying assistance and grant programs for all 50 states. Simply scroll down and click on your state to find the organizations and requirements for getting aid.

Michigan Down Payment and Closing Cost Assistance

Since many of our readers hail from The Great Lakes State, we want to have this information upfront. The Michigan State Housing Development Authority (MSHDA) offers down payment assistance (DPA) loans that can provide up to $7,500 to a qualified homebuyer. 

Also, select zip codes can qualify for the MI 10K DPA Loan, which can offer up to $10,000 in aid. Check out this list of eligible ZIP codes to see if you qualify!

  • But wait, there’s more: MSHDA also has programs to help homeowners after they buy a home if they are delinquent on certain housing expenses like utilities or mortgage payments.

Look For Builder Incentives Too

Another option is to go with the builder’s preferred lender and explore their financing incentives, which can help with closing costs to lower the loan’s overall costs. By combining federal mortgage loans, state homebuyer programs, and builder incentives, you can make your new home purchase far more accessible than you once thought.

Disclaimer: This article is for informative purposes only. For complete and accurate information, speak to your trusted financial advisor.