September 26, 2022

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Mississippi First-Time Home Buyer | 2022 Programs and Grants

What to know about buying a house in Mississippi

First-time home buyers in Mississippi have a leg up. Home prices in the state are below the national average and are rising less quickly than in most other states.

And the Magnolia State is very helpful to first-time buyers. Qualifying borrowers could be in line for special mortgages with competitive rates, federal tax breaks, home buyer education courses, and even down payment assistance in the form of a forgivable loan. Here’s how to get started.


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Mississippi home buyer overview

In June 2022, the median home sales price in Mississippi was $164,490, according to Zillow. That was 15.3% higher than a year earlier.

Those figures are well below the nationwide average. Across the U.S., Zillow says the average home price was $354,165 for that same period. And that was an increase of 19.8% year-over-year.

Mississippi home buyer stats

Average Home Sale Price in MS $164,490
Minimum Down Payment in MS (3%) $4,930
20% Down Payment in MS $32,900
Average Credit Score in MS1 681
Maximum MS Home Buyer Grant2 $15,000+ forgivable loan
in Jackson only. $7,000
forgivable loan statewide

Down payment amounts are based on the state’s most recently available average home sale price. “Minimum” down payment assumes 3% down on a conventional mortgage with a minimum credit score of 620.

If you’re eligible for a VA loan (backed by the Department of Veterans Affairs) or a USDA loan (backed by the US Department of Agriculture), you may not need any down payment at all.

First-time home buyer loans in Mississippi

If you’re a Mississippi first-time home buyer with a 20% down payment, you can get a conventional loan with a low interest rate. And you never have to pay for private mortgage insurance (PMI).

Of course, few first-time buyers have saved enough for 20% down. But the good news is, you don’t need that much. Not by a long shot.

Qualifying borrowers can often get into a new home with as little as 3% or even 0% down using one of these low-down-payment mortgage programs:

  • Conventional 97: From Freddie Mac or Fannie Mae. 3% down payment and 620 minimum credit score. You can usually stop paying mortgage insurance after a few years, once you’ve built at least 20% equity in your home
  • FHA loan: Backed by the Federal Housing Administration. 3.5% down and a 580 minimum credit score. But you’re typically on the hook for mortgage insurance until you refinance to a different type of mortgage, move, or pay off your loan
  • VA loan: Only for eligible veterans and service members, reservists, and National Guard. Zero down payment is required. Minimum credit score varies by lender but often 620. No ongoing mortgage insurance after closing. These are arguably the best mortgages available, so apply if you’re eligible
  • USDA loan: For those on low-to-moderate incomes buying in designated rural areas. Zero down payment required. Credit score requirements vary by lender but often 640. Low mortgage insurance rates
  • MHC mortgage: Can provide mortgage credit certificates that can significantly reduce your federal tax bill. Plus, two down payment assistance programs for qualifying borrowers. More information below

Note that government loan programs (including FHA, VA, and USDA home loans) require you to buy a primary residence. That means you can’t use these loans for a vacation home or investment property.

In addition, most programs let you use gifted money or down payment assistance (DPA) to cover your down payment and closing costs. Depending on the mortgage loan you choose, you could potentially get into your new house with minimal cash out of pocket.

If you’re unsure which program to choose for your first mortgage, your lender can help you find the right match based on your finances and home buying goals.

Mississippi first-time home buyer programs

The Mississippi Home Corporation (MHC) has a helpful home buyer’s guide that might provide useful information. It also offers mortgage credit certificates that can cut your federal tax liability, making homeownership more affordable.

In addition, the MHC provides mortgage loans to qualified home buyers in Mississippi. To qualify for an MHC mortgage, you’ll need to be within household income limits. These vary both by household size and by county. You can look up the cap that applies to you on the corporation’s Income Limits webpage.

You’ll also need to meet the eligibility criteria for the type of mortgage you want. These typically include a minimum credit score threshold and maximum debt-to-income ratio (DTI).

The MHC doesn’t say much about the mortgages it offers besides what we’ve reported. So, ensure the mortgage rate and closing costs you’re offered are competitive by getting quotes from other lenders.

Mississippi first-time home buyer grants

The MHC has two main down payment assistance programs:

  • Smart 6: Borrow $6,000 toward your down payment with no monthly payments and a 0% interest rate. The home must be your primary residence and you’ll repay the amount you borrow only when you sell the property
  • MRB 7: Borrow up to $7,000 toward your down payment as a 10-year second mortgage. Again, there are no monthly payments and the interest rate is 0%. At the end of 10 years, your loan is forgiven, provided the home remains your principal residence. The eligibility criteria are slightly stricter for this program than for Smart 6

In addition, teachers may be eligible for the HAT program, which provides grants rather than loans. Click the link for details.

To get a mortgage credit certificate or down payment assistance, you’ll have to choose your lender from those on the MHC’s list of participating mortgage companies.

Buying a home in Mississippi’s major cities

For a Mississippi first-time home buyer, Jackson is by far the most affordable of the Magnolia State’s three biggest cities. Its home prices are the lowest — and they actually fell during the 12 months ending in June 2022.

Homes in Southaven are much more costly. And Gulfport sits between those two extremes but is closer in terms of home prices to Southaven than Jackson.

Jackson first-time home buyers

The median list price in Jackson, MS, was $150,000 in June 2022, according to Realtor.com. That was down by 6.3% year over year.

If you want to buy a home at that median price, your down payment options might fall between:

  • $4,500 for 3% down payment
  • $30,000 for 20% down payment

The City of Jackson has its own down payment assistance program, which might be more attractive to some homebuyers than the statewide option.

This is available only to home buyers with relatively low incomes: at or below 80% of the area median income (AMI). And your next home’s purchase price cannot exceed $156,000. You’ll also need to complete an approved 8-hour course of homeownership education training.

If you can clear those requirements and meet credit guidelines, you may be in line for a good deal: a second mortgage of up to $15,000 or more with a 0% rate and no monthly payments.

A portion of that second mortgage is forgiven each year until the loan is cleared.

  • If you borrow $15,000 or less, 20% of the debt is forgiven each year, so you’ll owe nothing on your second mortgage at the end of year 5
  • If you borrow more than $15,000, 10% of the debt is forgiven annually, so you’re free and clear at the end of the 10th year. You’ll presumably have to repay the outstanding amount if you sell the home before your loan is fully forgiven

Read Jackson’s Homebuyer Assistance Program Guidelines for more information and conditions.

Gulfport first-time home buyers

The median list price in Gulfport was $224,900 in June 2022, according to Realtor.com. That was up 28.5% year over year.

If you want to buy a home at that median price, your down payment options might fall between:

  • $6,750 for 3% down payment
  • $44,980 for 20% down payment

When we searched the web and the City of Gulfport’s website, we could find no trace of a down payment assistance program. You can call City Hall at (228) 868-5700 to make sure we haven’t missed anything.

You can, of course, apply to the Mississippi Home Corporation down payment assistance program (details above).

Southaven first-time home buyers

The median list price in Southaven, MS, was $299,900 in June 2022, according to Realtor.com. That was up by 25% year over year.

If you want to buy a home at that median price, your down payment options might fall between:

  • $9,000 for 3% down payment
  • $59,980 for 20% down payment

When it comes to down payment assistance, the situation in Southaven is similar to that in Gulfport. In other words, we can’t find a current program either on the web or on the city’s website. You can call city hall at (662) 280-2489 to check.

You can also apply to the Mississippi Home Corporation down payment assistance program (details above).

Where to find home buying help in Mississippi

All the organizations we’ve listed above should provide advice freely to any Mississippi first-time home buyer or one purchasing in their local area.

In addition to our selection, the U.S. Department of Housing and Urban Development (HUD) provides a list of statewide resources.

Statewide first-time home buyer programs in Mississippi

What are today’s mortgage rates in Mississippi?

You can see today’s live mortgage rates in Mississippi here. You can also experiment with a mortgage affordability calculator to determine your budget and to see how items like interest rate and down payment affect your monthly mortgage payment.

When you’re ready to start the home buying process, make sure you get personalized rate quotes from at least three mortgage lenders.

Don’t just look at advertised rates online; actually apply for preapproval and compare the interest rates and fees you’re offered. That’s the only way to know you’re getting the best deal possible on your new home loan.

1Source: Experian.com 2022 study of 2021 data

2Based on a review of the state’s available DPA grants at the time this was written

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.