First-Time Homebuyer Programs in Wisconsin

Updated: April 21, 2023

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While homeownership is a life goal of many, financing a home purchase can be challenging. MoneyGeek gathered information on various first-time homebuyer programs in Wisconsin that help first-time homebuyers purchase a property.

What Is a First-Time Homebuyer Program & How Can It Help?

Homebuyer programs help first-time homebuyers with down payments and loan terms. A down payment is the percentage of the home’s cost the buyer pays upfront. Typically, lenders require borrowers to put 20% of the home’s purchase price as a down payment.

A larger down payment will qualify you for a lower interest rate and may also mean lower monthly payments. Yet, in these challenging financial times, many first-time homebuyers find it difficult to save for a down payment. Thankfully, several federal programs are available, including zero-down-payment programs like USDA and VA loans and low-down-payment programs like conventional, FHA and FHA 203(k) loans.

In addition to these federal programs, Wisconsin offers residents first-time homebuyer programs. For instance, the Wisconsin Housing and Economic Development Authority’s (WHEDA’s) Capital Access Advantage program helps you cover down payment and closing costs.

Zero-Down-Payment Loan Programs

If you don’t have money to use for a down payment, you can apply for a zero-down-payment mortgage, such as a USDA or VA loan.

USDA Loans

USDA loans assist homebuyers interested in purchasing a USDA-designated rural property in the U.S. These loans are issued by the U.S. Department of Agriculture and do not require a down payment.

To qualify, the homebuyer must be a U.S. citizen or permanent resident with at least a 650 credit score. You must have a stable income, and the household income must be equal to or less than 115% of the area median income.

There are three home loan programs under the USDA:

  • Direct Loan Program: Offers direct loans to low- and very-low-income applicants.
  • Guaranteed Rural Housing Loan: Provides loans to low- and moderate-income applicants through approved lenders.
  • Home Repair Program: Helps homeowners finance home repairs, improvements and modernization.

USDA loans have many advantages, like requiring a lower credit score, charging low origination fees and having lower interest rates than conventional or FHA loans. However, these loans require borrowers to pay an upfront funding fee.

VA Loans

You can purchase a home with a VA loan if you’re a veteran, active-duty military personnel or a spouse of a military officer. These loans are ideal for homebuyers with a military background because they have lower interest rates and don’t require a down payment. You also won’t have to purchase private mortgage insurance (PMI) with these loans.

VA loans are issued by private lenders but backed by the U.S. Department of Veterans Affairs. They generally don’t have strict credit score requirements.

However, these loans require you to pay a one-time funding fee. Also, you might not be able to finance the purchase of a condominium with a VA loan. In addition, you won’t get approval if you have any federal debt.

Low-Down-Payment Loan Programs

Low-down-payment loan programs help homebuyers who find it challenging to make a 20% down payment. The low-down-payment options are conventional, FHA and FHA 203(k) loans.

Fannie and Freddie (Conventional) Loans

Most homebuyers around the U.S. opt for conventional loans, making them the most popular mortgage option. These loans aren’t backed by any government agency and are issued by private mortgage lenders. You typically repay them over a 30-year term.

Conventional loans that meet the limits and requirements set by Fannie Mae and Freddie Mac are known as conforming loans. Non-conforming loans exceed conforming loan limits.

You can get a conventional loan with less than a 20% down payment; however, the lender will make it mandatory for you to purchase private mortgage insurance (PMI) to minimize its risk.

FHA Loans

FHA loans can significantly benefit homebuyers who can’t afford a large down payment or have low credit scores. These loans are backed by the Federal Housing Administration (FHA) and private mortgage-insured.

You can get an FHA loan with a 3.5% down payment and a low credit score. The maximum loan amount will vary based on your location. Homebuyers getting an FHA loan can typically choose between a 15- and 30-year term with fixed interest rates.

The FHA loans benefit homebuyers in many ways; however, you must purchase mortgage insurance with these loans to protect your lender’s financial interest. Mortgage insurance premiums for FHA loans are high and last until you repay the loan.

FHA 203(k)

An FHA 203(k) loan is the perfect option for homebuyers looking for a mortgage to purchase an older home, as it covers the purchase cost and the renovation expenses. Two types of FHA 203(k) loans are available: the standard 203(k) loan for major structural renovations and the streamlined 203(k) loan for minor cosmetic repairs.

Although you might find it easy to qualify for an FHA 203(k) loan, certain limitations and restrictions apply. For example, not all rehabilitation projects are eligible for these loans.

Homebuyers can take out an FHA 203(k) loan as a 15- or 30-year fixed-rate mortgage or a mortgage with adjustable interest rates. The loans require mortgage insurance.

Key Takeaways

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USDA loans - Best suited for homebuyers looking to purchase a home in rural areas of the U.S.

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VA loans - Active-duty servicemen, their spouses and veterans can get a VA loan with no down payment or PMI.

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Fannie & Freddie loans - A popular option among homebuyers, it allows a low down payment.

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FHA loans - They're government-backed loans for homebuyers with low credit scores; however, you will have to buy mortgage insurance.

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FHA 203(k) loans - They help finance the purchase and renovation cost of an older home that needs repairs.

Wisconsin Homebuyer Programs

Although federal loans are good options, several first-time homebuyer programs in Wisconsin are also available.

Capital Access Advantage

The Wisconsin Housing and Economic Development Authority’s (WHEDA’s) Capital Access Advantage program provides down payment and closing costs assistance to low-income borrowers. It doesn’t charge interest and offers a minimum loan amount of $3,050.

First Time Home Buyer (FTHB) Advantage

The First Time Home Buyer (FTHB) Advantage program offers a 30-year fixed-rate home loan to qualified first-time home buyers in Wisconsin.

HUD resources WI

The U.S. Department of Housing and Urban Development has provided a list of resources to help first-time homebuyers purchase a home in Wisconsin.

FAQs for First-Time Homebuyer Programs in Wisconsin

To help you learn more about first-time homebuyer programs in Wisconsin, MoneyGeek answered commonly asked questions.

Does Wisconsin have any first-time homebuyer programs?
What qualifies me as a first-time homebuyer in Wisconsin?
Can you buy a house in Wisconsin with no down payment?
Who can help me with my down payment on a house in Wisconsin?
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