A Guide For First-Time Home Buyers In Alaska

Buying a house in Alaska appeals to many people, thanks to its beautiful scenery and lack of state income tax.

Alaska also features many programs to help make homeownership more affordable for first-time home buyers. Before you start house hunting, take some time to explore the available programs and their requirements.

Who Qualifies As A First-Time Home Buyer In Alaska?

According to the Alaska Housing Finance Corporation, a first-time home buyer is a person who hasn’t owned a primary residence in the past 3 years. Eligible first-time home buyers may qualify for special loans and assistance programs.

Key Statistics For Alaska Home Buyers

The following table outlines some quick statistics on home buying and home buyers in Alaska.

Traditional First-Time Home Buyer Loans In Alaska

First-time home buyers have specific home loan programs and mortgage options available to them, but there are home loan options all buyers – including first-time buyers – should consider. Here are some traditional mortgage options to consider:

• Conventional loans: A conventional loan isn’t backed by a government agency, so it can be more challenging to qualify for than other types of loans. You’ll need a minimum credit score of 620 and a minimum 3% down payment to qualify.
• FHA loans: The Federal Housing Administration backs FHA loans to help low-income borrowers secure affordable housing. FHA loans have more relaxed credit requirements, and you can qualify with a 3.5% down payment.
• VA loans: VA loans are backed by the Department of Veterans Affairs and are available for qualified veterans, active-duty service members and surviving spouses. VA loans have lower credit requirements and typically require no down payment and no private mortgage insurance (PMI).
• USDA loans: USDA loans are available for low-income borrowers looking to buy homes in eligible rural areas. The typical credit score needed to qualify is 640, and there are no down payment requirements. To qualify, you must meet income and property requirements.

Alaska First-Time Home Buyer Programs And Loans

The Alaska Housing Finance Corporation (AHFC) offers the following loan programs for eligible first-time buyers.

AHFC First Home Program

The First Home program offers loans at a reduced interest rate to eligible home buyers. To qualify, you must be a first-time home buyer looking to purchase an eligible property in Alaska. The following properties are eligible for this program:

• Single-family residences
• Condominiums
• Common interest community units
• Duplexes (at least one unit must be the borrower’s primary residence)
• Type I manufactured homes

AHFC First Home Limited Program

The First Home Limited program also offers loans with reduced interest rates to eligible first-time home buyers. Unlike the First Home program, applicants must meet certain income and home purchase limits.

You’ll qualify as a first-time home buyer if you haven’t owned a home in the last 3 years. However, this program offers two exceptions to their first-time home buyer rule:

• Your house is in a targeted area with higher income and acquisition cost limits.
• You’re a veteran or active-duty service member who has completed your initial military obligations.

More Options For Buying A House In Alaska

Here are additional programs available to Alaska home buyers.

AHFC Interest Rate Reduction For Low-Income Borrowers Program

The Interest Rate Reduction for Low-Income Borrowers (IRRLIB) program offers subsidized interest rates to low-income borrowers. The type of discount you receive will depend on your income and family size.

The program provides interest rate deductions between 0.5% – 1% on a loan’s first $180,000. If your loan exceeds $180,000, you’ll receive a blended interest rate rounded up to the next 0.125%.

To qualify:

●      Your income must fall below the area’s income limits.

●      You must take an approved home buyer education course.

●      You must schedule a home inspection if the home is over 10 years old.

AHFC Affordable Housing Enhanced Loan Program

The Affordable Housing Enhanced Loan program (AHELP) partners with other agencies to provide homeownership assistance. Qualified borrowers receive down payment assistance or secondary financing. The assistance can be a grant, deferred payments, a forgivable loan or a combination of all three options.

Home Opportunity Program

The Home Opportunity Program (HOP) provides homeownership opportunities to low-income borrowers in Alaska. Applicants can receive down payment assistance, up to $3,000 in closing cost assistance and a possible buydown of the primary mortgage.

Your income must be less than 80% of the median area income, and you must work with a qualified mortgage lender that offers the program to qualify.

Energy Efficiency Interest Rate Reduction

The AHFC Energy Efficiency Interest Rate Reduction (EEIRR) program promotes energy efficiency in new and existing homes in Alaska. You may qualify for an interest rate reduction if you meet the program’s requirements.

To qualify, you must either finance a new or existing energy-efficient home or plan to make energy improvements to an existing home. The interest rate reduction applies to the loan’s first $200,000. The rate reduction will depend on whether the property has access to natural gas.

AHFC Closing Cost Assistance Loan

The Closing Closing Cost Assistance loan offers a competitive 30-year fixed-rate loan with closing cost assistance. Qualified borrowers can receive assistance up to 4% on the initial principal balance of the loan. You can use the funds toward your closing costs or down payment.

To qualify, you must have a minimum credit score of 640. The program has no income limits, purchase price requirements or first-time home buyer restrictions.

AHFC State Veterans Interest Rate Preference Program

The State Veterans Interest Rate Preference program gives qualified veterans a 1% interest rate reduction on the first $50,000 of their home loan.

To qualify, you must be an honorably discharged veteran who served at least 90 days of military service. The surviving spouse of a veteran may also qualify for the program, but active military members aren’t eligible.

AHFC Manufactured Home Loan Program

The AHFC Manufactured Home Loan program is available for anyone financing a manufactured home in a mobile home park or on land. If you’re buying a Type II manufactured home, you could receive a loan of up to $175,000. All other Type II units are eligible for loans up to $100,000.

Regional And Statewide Programs And Assistance In Alaska

Alaska Native and Native American families can take advantage of programs based on location. For instance, the Tlingit Haida Regional Housing Authority provides homeownership assistance programs for people transitioning from renting to owning or experiencing financial hardship. The assistance also covers new construction grants for qualified applicants.

The U.S. Department of Housing and Urban Development (HUD) features homeownership assistance programs and resources available for Alaskans on its website.

How To Buy A House In Alaska

Here are the steps you should consider taking to buy a house in Alaska.

1. Start Saving

Before you start looking at houses, it’s a good idea to save up money for a down payment. If you can save up a 20% down payment, you’ll increase the likelihood of approval and securing the best rates on your mortgage.

While you can put down less than 20%, most loans require you to pay private mortgage insurance (PMI). A smaller down payment will likely mean higher monthly loan payments.

2. Get Approved

Once you’ve saved for the down payment, it’s time to get preapproved for a mortgage. Mortgage preapproval is important because it helps you understand how much house you can afford. And when you make an offer on a home, a preapproval letter lets the seller know you’re a serious buyer.

3. Find An Agent

As a first-time home buyer, it’s important to find an agent to walk you through this process. The right real estate agent can help you find homes that meet your budget and needs. They can also negotiate with the seller and ensure your interests are protected.

4. Embark On The House Hunt

Now it’s time to begin house hunting. Spend some time considering your nonnegotiables in a home to help filter your search as you start looking at possible homes.

If you’re not sure where to begin, this house-hunting checklist might help.

5. Submit Your Offer

Once you’ve found the home you want to purchase, it’s time to make an offer to the seller. The seller can accept or reject your offer or make a counteroffer.

Your real estate agent will be invaluable during this process. They can help you come up with an offer and help you determine where you should negotiate.

6. Prepare For Closing

Once the seller has accepted your offer, it’s time to prepare for closing. You’ll start by getting a home appraisal to determine the home’s value and an inspection to identify any problems with the property. The title company will also finalize the loan and title transfer.

When closing day comes, you can expect to sign a lot of documents. You’ll sign the final loan application, mortgage note and Closing Disclosure. You’ll also pay closing costs, which usually range from 3% – 6% of the total loan amount.

First-Time Home Buyer Alaska: FAQs

Here are some commonly asked questions about how to buy a house in Alaska.

How much is a down payment on a house in Alaska?

You can expect to make at least a 3% down payment on a house in Alaska. However, you can avoid making a down payment with certain government-backed loans, like USDA and VA loans.

What credit score do you need to buy a house in Alaska?

The credit score you’ll need will largely depend on the type of mortgage you’re taking out. For instance, conventional loans have a 620 minimum credit score requirement, while you’ll need a minimum credit score of 580 to qualify for an FHA loan.

Is it expensive to buy a house in Alaska?

The median list price for a home in Alaska is $392,279, which is lower than the national median sales price of $417,700. However, the cost of living in Alaska is 25% higher than the national average.

How much is a home worth in Alaska?

The median value of a home in Alaska is $357,600.

The Bottom Line

If you’re a first-time home buyer in Alaska, consider taking advantage of various statewide loan and assistance programs.

Are you ready to start your home buying journey in Alaska? You can start your mortgage application today!