What to know about buying a house in Maine
Maine offers a range of help tailored to first-time home buyers. That can include special mortgage options and home buyer education courses.
If you’re eligible, you might also be able to get down payment assistance from the state. That can top up your savings so you can afford to buy a home more quickly than you thought possible.
In this article (Skip to ...)
- ME home buyer overview
- Home loan options
- ME home buyer programs
- First-time buyer grants
- Buying in Maine’s cities
- ME mortgage rates
Maine home buyer overview
The good news for any Maine first-time home buyer is that median home prices in the state are well below the national average of $428,000.
The median home sales price in Maine was $360,825 in June 2022, according to data from the Maine Association of Realtors. That was an increase of 16.4% year over year.
However, housing inflation at a rate of 16.4% can still pose problems for some first-time buyers. And many homes in sought-after areas will cost above average.
Luckily, the Pine Wood State offers plenty of help to those wanting to purchase their first home. Read on for more information about home buyer education classes and homeownership programs available to Maine first-time buyers.
Maine home buyer stats
|Average Home Sale Price in ME1||$360,825|
|Minimum Down Payment in ME (3%)||$10,830|
|20% Down Payment in ME||$72,170|
|Average Credit Score in ME2||727|
|Maximum ME Home Buyer Grant3||"Little or no down payment required" with MSHA mortgages 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 U.S. Department of Agriculture), you may not need any down payment at all.
First-time home buyer loans in Maine
If you’re a first-time buyer in Maine 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). The same goes for buyers anywhere in the nation.
Of course, few first-time buyers have saved a 20% down payment. But the good news is, you don’t need one.
Maine home buyers 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
- FHA loan: Backed by the Federal Housing Administration. 3.5% down and a 580 minimum credit score. But you’re on the hook for mortgage insurance premiums (MIP) until you refinance to a different type of mortgage, move, or pay off your loan
- VA loan: Only for veterans and active-duty service members. 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
- MSHA mortgage: You might be able to get one of those with “little or no down payment” plus help with your closing costs. 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.
Maine first-time home buyer programs
Main Housing First Home Loan
The MaineHousing First Home Loan program can be used in conjunction with a government-backed FHA, VA, or USDA mortgage, and with conforming loans in some areas. MSHA says, “There are options with little or no down payment required, and if you still need help with the cash for closing costs, we also offer a down payment and closing cost assistance option called Advantage.” We’ll get into the details of that below.
As is usual with state first-time home buyer programs, you have to choose a lender from a list of more than 40 approved by the MSHA. And there are a few qualifying criteria to be aware of:
- You’ll need to have a credit score of 640 or higher
- There are caps on household income. These income limits vary by household size and your county or city, though the website says that “most Maine households are income-eligible for the program”
- You must meet MainHousing purchase price limits
- The property must be a single-family home, condominium, mobile home, or 2-4 unit owner-occupied building.
And, as with any mortgage program, you need to be able to show that you can comfortably afford the monthly mortgage payments.
Additional MainHousing homeownership programs
If MainHousing First Home isn’t right for you, there are several other programs available.
- Salute ME and Salute Home Again: If you’re a veteran or an active-duty military service member wishing to buy your first home in the state, you may qualify for an additional discount on your mortgage rate of 0.25%
- MainHousing Self-Insurance for Mobile Homes: Those wishing to finance a mobile home may be able to take advantage of the authority’s mobile home self-insured option
- Pre-1976 Mobile Home Replacement Initiative: Replace mobile homes purchased before 1976 with a new Energy Star-certified manufactured home
Each of these programs has similar guidelines to First Home. Click the links for more information.
For home buyer education courses and foreclosure counseling approved by the MSHA, visit Maine HoMEworks’ website.
Maine first-time home buyer grants
MSHA says it can offer down payment assistance to buyers who opt for one of its homeownership programs.
Borrowers who fund their home purchase through any of the MaineHousing loan programs may be eligible for up to $5,000 in cash to use towards their down payment, closing costs, and any prepaid escrow expenses.
Assistance comes in the form of a grant — rather than a second mortgage — but homeowners may need to repay any money borrowed if the home is sold or refinanced. The Authority’s website is sparse on details, but its downloadable guide has some information.
- Qualifying borrowers must provide at least 1% of the loan amount to the home purchase, but this contribution can come from gift funds
- Buyers must complete a home buyer education class
To learn more, contact the MSHA at (800) 452-4668 or (207) 626-4600. Alternatively, you could contact one of the lenders on the authority’s approved list and ask an agent.
Explore other DPA options
Keep in mind that MSHA’s down payment assistance program may not be the only one operating in your area. Many cities, counties, and nonprofit organizations offer their own DPA options for first-time buyers.
You can ask your loan officer or real estate agent for recommendations, or do an internet search for "[your city or county] down payment assistance.”
Buying a home in Maine’s major cities
It’s a mixed picture for first-time home buyers in Maine’s three biggest cities. Portland is expensive. Lewiston is more affordable but has seen faster home price growth. Bangor may be the most affordable but is experiencing significant home price inflation in 2022.
Whichever of those you wish to buy in, be sure to check out the city’s down payment assistance program(s). Because that could make a big difference to your homeownership timeline.
Portland first-time home buyers
The median home listing price in Portland, ME was $475,000 in June 2022, according to Realtor.com. That was up 5.6% year over year.
At those home prices, making a down payment in Portland might cost:
- $14,250 for a 3% down payment
- $95,000 for a 20% down payment
As far as we can tell, the only down payment assistance offered by the Portland Housing Authority (PHA) is a voucher program to help existing tenants of the authority transition into homeowners. To qualify, you must have been a PHA tenant for at least one year and meet other eligibility criteria.
If that’s not you, you should turn to the statewide MSHA program or look for other options in the area.
Lewiston first-time home buyers
The median home listing price in Lewiston, ME was $250,000 in June 2022, according to Realtor.com. That was up an astonishing 27.5% year over year.
At those home prices, making a down payment in Lewiston might cost:
- $7,500 for a 3% down payment
- $50,000 for a 20% down payment
The City of Lewiston has teamed up with Auburn to create a Homebuyer Loan Program. Click the link for full details.
Briefly, here’s how it works: You open a savings account with the city and pay in at least $25 each month for a minimum of six months and a maximum of three years. The more and longer you save, the more you benefit — because when you’re ready to buy, the city will add to your savings, contributing $2 for every $1 you’ve saved. Obviously, all the money has to go toward your down payment.
Half the city’s contribution is an outright grant that you never have to repay no matter what. The other half is a forgivable loan with no monthly payments and a 0% interest rate. Providing you continue to own and occupy the home, that will be forgiven after:
- 5 years if the city’s contributed less than $15,000
- 10 years for city contributions between $15,000 and $40,000
- 15 years if it’s contributed more than $40,000
If you’re a good saver, that’s an attractive deal. You must have a low or moderate income no higher than 80% of the area median income to qualify.
Bangor first-time home buyers
The median home listing price in Bangor, ME was $235,000 in June 2022, according to Realtor.com. That was up 12.4% year over year.
At those home prices, making a down payment in Bangor might cost:
- $7,050 for a 3% down payment
- $47,000 for a 20% down payment
The City of Bangor’s Community and Economic Development Department runs both a down payment assistance program and a closing costs assistance program. If you are eligible, the former can provide up to 50% of your minimum down payment but is capped at $5,000. The latter offers up to $3,000 in closing costs.
Those details were gleaned from the department’s application form for the programs. But there is little other information that we could find on the website. So call (207) 992-4280 to discover whether you’re eligible and what form the help takes: a grant, loan, or forgivable loan.
Where to find home buying help in Maine
All the organizations we’ve listed above should provide advice freely to any first-time home buyer in the state of Maine or the area they serve.
In addition to our selection, the US Department of Housing and Urban Development (HUD) provides a list of city- and county-specific programs across Maine. These are as follows:
Statewide and regional first-time home buyer programs in Maine
- MaineHousing: Homebuyer programs, including down payment and closing cost assistance
- hoMEworks: Find a center nearest you that offers homebuyer classes
- Habitat for Humanity: Through volunteer labor, builds and rehabilitates houses for families in need
- U.S. Department of Agriculture Rural Housing: Homebuyer programs in rural communities
First-time buyer programs by city and county
What are today’s mortgage rates in Maine?
Remember, interest rates vary by borrower. Your own mortgage interest rate depends on factors like your credit report, loan program, down payment, and more.
Compare mortgage loan quotes from at least three different lenders to make sure you’re getting the lowest rate and upfront fees possible. Borrowers who do this often save thousands of dollars on their home loans.
And don’t forget to ask your lender about down payment and closing cost assistance. These programs could seriously speed up your home buying process.
1Source: Maine Association of REALTORS Housing Report
2Source: Experian.com study of 2021 and 2020 data
3Based on a review of the state's available DPA grants at the time this was written