Mississippi First-Time Home Buyer: 2023 Programs and Grants

What to know about buying a house in Mississippi

If you’re a Mississippi first-time home buyer, you have an advantage. Home prices in the state are lower than the national average and rising at a slower rate than in most other states. Qualifying borrowers may also be eligible for low-interest special mortgages, federal tax breaks, home-buyer education classes, and even down payment assistance in the form of a forgivable loan. Here’s where to begin.

In this article (Skip to ...)

• MS home buyer overview
• Home loan options
• MS home buyer programs
• First-time buyer grants
• Buying in Mississippi’s cities
• Resources
• MS mortgage rates

Mississippi home buyer overview

The median home sale price in Mississippi was $166,966 in April 2023. That was 3.5% higher than a year earlier, according to Zillow.

Even though Mississippi real estate prices are much lower than elsewhere in the country, saving enough money for a down payment can be a significant challenge for first-time home buyers in the state. However, many prospective homeowners may be eligible for one of the Mississippi Housing Corporation’s loan programs designed to make homeownership more affordable.

Mississippi home buyer stats

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 no private mortgage insurance (PMI).

Of course, few first-time buyers have saved enough for 20% down. But the good news is that 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 your mortgage loan, you could 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.

MHC Smart6

Mississippi Home Corporation’s (MHC) Smart6 program offers 30-year mortgages at competitive rates and with reduced mortgage insurance premiums. Smart6 is compatible with conventional 97 loans as well as government-backed mortgages such as FHA, VA, and USDA.

The loan program can be combined with funds for down payment assistance, too. Smart6 is available to first-time and repeat home buyers in Mississippi who want to buy a single-family home, condominium, townhome, or duplex. You can also buy a manufactured home with an FHA loan. Eligibility also requires a household income of no more than $110,000.

MHC Mortgage Revenue Bond 7 (MRB7)

MHC’s Mortgage Revenue Bond 7 (MRB7) program, which also offers a competitive interest rate and down payment assistance, is geared toward first-time home buyers, veterans, or those planning to buy a home in a specially designated target area.

Minimum credit scores vary depending on loan type. You must be within income limits, which vary by county. There are also purchase price restrictions. If the home is in a target area, the limit is $309,000; otherwise, the limit is $258,000.

Mississippi First-Time Home Buyer Loan Requirements

The MHC provides mortgage loans to qualified home buyers in the state of 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

First-time home buyers in Mississippi have access to grants and down payment assistance programs to make the home-buying process more affordable. The MHC has two main down payment assistance programs:

Smart6 down payment assistance

You can borrow $6,000 toward your down payment through the MHC 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.

MHC MRB7 down payment assistance

The MHC also offers qualifying borrowers up to $7,000 toward their 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 the Smart6 DPA.

Housing Assistance for Teachers (HAT)

Teachers can apply for grants through the Housing Assistance for Teachers program to help with down payments and closing costs. Teachers who want to live and work in Mississippi counties where there is a shortage of educators can get up to $6,000 in down payment and closing cost assistance. If the teacher stays in the school district for at least three years, the grant will be forgiven.

Mortgage Credit Certificate (MCC)

The mortgage credit certificate (MCC) program reduces the amount of federal income tax that borrowers must pay, freeing up more income for them to qualify for a mortgage. Qualifying Mississippi first-time home buyers are allowed to use up to 40% of the mortgage interest paid as a tax credit, up to a maximum of $2,000 per year. This tax credit can be claimed every year for the life of the mortgage, as long as the home remains the taxpayer’s primary residence.

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 April 2023.

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 $115,000 in April 2023, according to Realtor.com. That was down by 17.9% year over year.

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

• $3,450 for 3% down payment
• $23,000 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 meet 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

Gulfport first-time home buyers

The median list price in Gulfport was $229,900 in April 2023. That was up 6.9% year over year, according to Realtor.com.

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

• $6,900 for 3% down payment
• $45,980 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 April 2023. That was up by 7.1% year over year, according to Realtor.com.

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

• Mississippi Home Corporation: Homebuyer programs, including down payment and closing cost assistance
• Habitat for Humanity: Through volunteer labor, builds and rehabilitates houses for families in need
• USDA Rural Development Office: USDA Rural Development Office — homebuyer programs in rural communities
• Consumer Credit Counseling Services: Get help with budgeting, debt management, and credit issues
• Mississippi State Community Action Agencies: Listed by county, offering various services including homebuyer education and/or down payment assistance
• Home Ownership Vouchers: Some public housing agencies help you become a homeowner through the Housing Choice Voucher Homeownership Program

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 see how items like interest rates and down payments affect your monthly mortgage payment.

When you’re ready to start the home-buying process, get personalized rate quotes from at least three mortgage lenders. Don’t just look at advertised rates online. Apply for preapproval and compare the interest rates and fees you’re offered. That’s the only way to know you get the best deal on your new home loan.

¹Source: Zillow Mississippi Home Value Report

²Source: Experian.com 2022 study of 2021 data

³Based on a review of the state's available DPA grants at the time this was written