First time homebuyers will find in this guide a wealth of resources to mortgage programs and housing assistance in Mississippi. We cover interest rates, look at housing affordability, review average closing costs in Mississippi and suggest avenues for additional assistance. Let’s break it down a step at a time.

1

Check Mortgage Rates in Mississippi

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Getting the lowest possible interest rate on a mortgage in Mississippi involves several factors such as individual credit scores and income, prevailing economic conditions, demand for housing, and sometimes good timing. A first-time homebuyer should get free copies of credit reports, which lenders use in setting interest rates for every buyer.

Anyone in Mississippi can get a free credit report once a year from the three major credit reporting companies: Experian, TransUnion and Equifax. Review all information in the reports, dispute inaccurate information and bring any delinquent accounts current to improve credit scores.

Mississippi lenders will provide a free rate quote at no obligation. Many mortgage companies post their daily interest rates online, but the actual interest rate offered will vary with each individual buyer.

Learn more about factors that drive mortgage rates.

2

Help for the First-Time Homebuyer in Mississippi

The Federal Housing Administration in Mississippi offers several loan products for first-time home buyers and low-income individuals seeking to buy a house. In addition, HUD, Fannie Mae, the USDA, and the Veterans Administration offer programs tailored to the needs of different Mississippi residents. Mississippi HUD has statewide programs to aid first-time homebuyers, as well as educational materials to learn about the mortgage process and what first-time buyers should do to prepare for success. Education is a vital first step in setting expectations for homeownership in Mississippi because many first-timers have unrealistic expectations of what they can afford.

FHA and HUD also sponsor government-backed mortgage loans to help Mississippians get into their own homes. A searchable list of federally approved lenders in Mississippi is available here.

You can review this MoneyGeek first-time homebuyers guide for an overview on the homebuying process.

Financial Help for First-Time Buyers in Mississippi

Use these tools and a comprehensive list of financial assistance programs in Mississippi to help cover such needs as closing costs and down payments:

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Mississippi Housing Counselors

3

Home Affordability in Mississippi: What to Know

Individual income is a significant factor in determining whether a lender will approve a mortgage – and for how much. Mississippi lenders look at a prospective borrower’s debt-to-income ratio when determining whether and how much to loan for a mortgage. The borrower must show an ability to repay existing debts on time, cover living expenses and still have enough income left over to afford a mortgage payment. In Mississippi, most lenders will cap loans at no more than 33 percent of the homebuyer’s gross monthly income, with a good credit history.

How Mississippi Mortgage Rates and Home Prices Affect Monthly Payments

Metro Area Estimated Monthly Mortgage Payment* Q1 2016 (Change from Previous Year) 2015 Median Home Price 2014 2013
Gulfport-Biloxi $565 $120,300 (+3.70%) $126,700 $117,100 $107,800
Jackson $759 $161,500 (+4.80%) $166,100 $155,300 $148,200
Memphis $638 $135,800 (+2.80%) $147,000 $138,600 $129,400

Source: National Association of Realtors Q1 2016 Metropolitan Median Area Prices and Affordability report.
*Estimated Monthly Mortgage Payment is based on median home prices for the metro area in Q1 2016 and a 30-year fixed mortgage with today’s rates.

4

How Much You Can Borrow in Mississippi?

Mississippi FHA loan limits are different in each county, but cap at about $271,000. Conventional loans through a traditional bank or mortgage broker are significantly higher, up to about $417,000, but have more stringent requirements to qualify. Here is a breakdown of FHA and conventional lending limits in Mississippi:

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5

Buying a Home in Mississippi: Wisdom from the Experts

Malcolm Shepherd is executive director of the Mississippi Housing Initiative.

Beulah Greer is executive director of the Community Students Learning Center of Lexington.

What’s the biggest thing first-timers overlook when they’re ready to buy a house?

Shepherd

Our experience indicates they have that American dream and see themselves in this home that is really more than their income can buy. Taking time to go through a pre-assessment is good. So the process of free homebuyer education brings them to the ground so they can begin to understand the affordability. We don’t want people to overextend themselves. Once they understand this, then, there’s understanding closing documents, the need for warranties on the home, in addition to being able to get a housing inspection and an appraisal. The inspection reveals the energy efficiency of the home, the value and condition of the home. These can be hidden costs. So pre-purchase education is one of the biggest needs. And making people understand they never want to go beyond 35 percent of their earnings on a first-time home. Everybody will usually agree on 30 percent but the drop-dead number is 35 percent of your monthly income.

Greer

Our first time homebuyers are not understanding that they need to take care of their finances, pay their bills. Often they’re not qualifying due to credit scores. So we’re providing education services and really stressing that people try not to buy more than they can afford. Buying on credit gets more people into problems and then they find it harder to qualify for a mortgage.

What’s a fast way to repair damaged credit so a new homebuyer can qualify for a mortgage?

Shepherd

Pull your reports from all three agencies every six months and go over them. Nonprofit organizations like ours can assist you with understanding these reports and what to get taken off or challenged. Along with this is you have to prepare a household budget and stay with it. Put items on layaway instead of using credit cards. Pay off credit cards as soon as you can because it’s the balance that counts against you on credit scorers. It may be a good investment to go to a credit repair company and challenge some items.

Greer

We can help with that. We have a credit counseling program that looks at all their issues. We help set up a plan to pay. The other thing is people may have a pretty good income, but they don’t know how to manage their money. So make a plan, set a budget, clean up your credit report and take some classes on homebuying.

What’s the single greatest obstacle to home ownership right now in your state?

Shepherd

We’ve got so many problems here, when we talk about an industry isolated away from other industries. Our depressed economy is related to our ability to own a home. It’s the income piece that’s a barrier in Mississippi. Families often aren’t making enough money to qualify for a home that’s adequate for the size of the family. But homebuyer education counseling is the first line of defense of preparing to buy a home.

Greer

Finding funding is an obstacle. Coming up with the downpayment. We’re working with the USDA Rural Program and others to help with funding, but these federal programs take time. People get discouraged, so they go out and buy something else, and then they can’t afford the house payment because they’re carrying too much debt. So funding is an issue. It’s self-discipline.

6

Plan for Mississippi Closing Costs

Closing costs are one of the unpleasant realities of wrapping up a home sale. Lenders charge a fee for the loan. If brokers are involved, they take a cut, too. In Mississippi a licensed appraiser gets paid for determining the fair market value of the house. These fees and charges can add up pretty quickly, running into several thousand dollars in added costs that must be paid before the buyer receives the keys to the front door of a new home. Below are the average closing costs in Mississippi, broken down by type of service.

Average Closing Costs in the Magnolia State

Average Origination
Fees
$1,046
Average Third-Party
Fees
$837
Average Total Closing
Costs
$1,883

Source: Bankrate’s 2015 survey of closing costs.

Lower Mississippi Mortgage Payments with Refinancing

Most banks and mortgage companies in Mississippi offer refinancing options to help homeowners reduce their monthly payments. The FHA also offers refinancing loans, although these are only available to homeowners who live in the residence being refinanced. One deciding factor on qualifying for a refinance will be a good history of on-time mortgage payments. Mississippi lenders may also pull and review credit reports before approving a refinance.

Mississippi was hit hard by the recession, but property values are bouncing back. So lenders are offering attractive refinancing options to stay competitive and generate business, especially when conventional mortgage lending is at an ebb. It may also be helpful to refinance and cash out some equity in the home if property values rise significantly. This money can then be used to pay down more expensive debt, such as credit cards, or rolled into home improvement projects.

Check this MoneyGeek guide for comprehensive general information on refinancing a house.

More Mortgage Resources in Mississippi

Mississippi Housing Partnership – First-Time Homebuyer Intake Form

This housing partnership requires participants to complete and submit certain documents to begin the lending qualification process.

Down Payment Assistance and Grants in Mississippi

An overview of low-interest loans and grants to help homebuyers.

Mississippi Home Corporation Down Payment Assistance

This state agency provides qualified low- to moderate-income first-time home payers with down payment assistance.

Home Ownership Assistance Mississippi HUD

List of HUD programs to help homebuyers get a mortgage.

FHA Home Loans Mississippi

Information on federal lending programs to aid first-time and low-income home buyers.

First Time Homebuyer Programs in Mississippi

Up-to-date list of lending programs in the Show Me State, where first-time house buyers can turn for help.

Mississippi First Time Homebuyer Loans

Programs to help prospective buyers secure a mortgage on a Mississippi house.

First-Time Homebuyer Mississippi: Incentives, Programs and Grants

Resource from the Movoto Foundation summarizing loans, grants and incentives for first-time homebuyers in the state.

Mortgage Foreclosure Prevention and Assistance

Resources from the state attorney general’s office.

Homebuyer Assistance Programs in Mississippi

Rundown of lending assistance programs in the state by locality, income level, credit scores and other factors.

Updated: July 28, 2017