Model house with stacks of money

With a lower cost of living than many other places in the nation, it’s no surprise that so many people want to call Wisconsin home.

Whether you’re a first-time homebuyer or you’ve purchased property in the Badger State before, you may not be familiar with all of the mortgage options available to you. Here’s a quick look at everything you need to know about WHEDA home loans and how you might be able to benefit from one.

Family in front of a home with the words Medium home cost united states - $291 700, wisconsin - $231.300, Fond du Lac area - $167,200

What is the WHEDA Home Mortgage Program?

If you’re concerned that a low income or a not-so-great credit score are standing in the way of you buying a home, think again. The Wisconsin Housing and Economic Development Authority, or WHEDA, offers a number of loans that can make your dreams of homeownership a reality.

Much like a government-backed FHA loan, WHEDA home loans are insured by the authority and administered by local lenders like FVSBank. They make it much easier for low-income families to get on the property ladder. WHEDA loans are a great choice for first time homebuyers in Wisconsin, veterans, or others who may not qualify for a conventional loan.

There are a number of benefits to a WHEDA mortgage, like:

  • Low down payments – usually 3% or less of the property price
  • Low interest rates – WHEDA loans are typically some of the lowest rates available and have 30-year fixed terms
  • Tax benefits – qualified borrowers can often claim up to 40% of their loan interest as a tax credit
A person exchanging money with a banker

Types of WHEDA Mortgage Loans

WHEDA Advantage Conventional

Most WHEDA home loan applicants apply for the Advantage Conventional loan. Although a large number of people taking out this type of loan are first time homebuyers, you don’t need to be in order to qualify.

To take out this type of loan, you will need a minimum credit score of 620 and be purchasing either a single-family home, condominium, 2 to 4 unit home, or a double-wide manufactured home.

The property must be your primary residence and meet WHEDA income limits, which is based on where the home is located and your household size. You don’t need any down payment unless you’re buying a 2-to-4-unit property, when 3% of the purchase price and 6 months in reserve is required. A Landlord Education course is also required for those buying 2-to-4-unit homes.

If you are a first-time buyer, there are some special WHEDA requirements that you have to fulfill, like taking a brief educational class about home ownership. All WHEDA loans have a limit to how much you can borrow, but first-time buyers will typically have a lower limit than those who have bought a home before.

WHEDA Advantage FHA

Another option for homebuyers is the Advantage FHA loan. This has many of the same features as the conventional WHEDA mortgage, with some notable exceptions.

You’ll need a slightly higher credit score for this loan – a minimum of 640. You’re also only able to use this loan for a single-family residence, 2 unit property, or a HUD approved condominium. Loan amount limits are determined by the national FHA program rather than WHEDA and this will be dependent on your county and the type of property you’re buying.

The biggest difference with this loan is that you’ll need to make a minimum 3.5% down payment on any property type. The down payment assistance program in Wisconsin can be used to cover this.

What are the WHEDA Mortgage Loan Requirements?

First time buyers must take a homebuyers education course before they can be approved for any WHEDA loan. While this may seem like an additional step that isn’t worth the hassle, the class is a great way to learn more about the true cost of home ownership and give you a better understanding of the mortgage and home buying process.

When you’ve never bought property before, details like private mortgage insurance (PMI), real estate taxes, home insurance, homeowners association fees, and even regular property maintenance are likely costs that you’re not familiar with. You may never have had to think about factoring utilities like water or gas into your budget if this was included in your monthly rent. So how do you figure out what these will cost in your new home?

The class will cover all these topics and give you a better understanding of how much you can expect to spend. This help you budget for the future when you’re living in your new home, and it also means that you can avoid buying a house that will ultimately be too expensive for you to live in.

The team at FVSBank knows that buying a home for the first time can seem like a daunting task, but many of our customers have found the class to be helpful.

“The first-time home buyer education class is a quick and easy way to gain a high level overview of what to expect when owning your first home. The class can oftentimes answer many of the common questions a buyer/owner may have in regard to the most important purchase of their lives.”

WHEDA Mortgage Down Payment Assistance Programs

For many low-income families, saving enough money for a down payment on a house is often an unrealistic goal. WHEDA offers down payment assistance programs through local lenders like FVSBank that can help you to finance this part of your home purchase.

The WHEDA Easy Close DPA Program, offered through FVSBank, allows borrowers to take out a minimum of $1,000 and up to 6% of the home’s purchase price when used with a WHEDA conventional or FHA first mortgage loan. The interest rate on this loan will be set at the same rate as your WHEDA mortgage and you’ll make monthly repayments on this individual loan for a maximum of 10 years, in addition to your monthly mortgage payment.

All of the eligibility requirements for an Easy Close DPA loan are the same as a conventional and FHA WHEDA loan, since the funds are being used to support the same purchase. Between both the DPA loan and your mortgage, you should be able to completely fund your home purchase using WHEDA assistance.

For homebuyers in a high-need housing area, you may be eligible for the WHEDA Capital Access DPA. This loan is a minimum of $3,050, with the maximum set at 3% of the purchase price. This is a 30-year fixed loan with a 0% interest rate. Payments are deferred until your WHEDA mortgage has been paid in full or refinanced, which means that you won’t have monthly payments for the down payment loan until much later.

Start Your WHEDA Home Loan Application Today

At Fox Valley Savings Bank, our team of experienced lenders is here to help you buy the home of your dreams. Whether you know a little about WHEDA home loans and are ready to apply, or you’d like to discuss all the options available to you, we’d be happy to share our knowledge to find the right mortgage for your financial situation.

Since 1934, we’ve served customers in Oshkosh, Waupun, Fond Du Lac and the surrounding region. If you’re new to the area, our team would be happy to fill you in on all the great recreational activities, shopping, and cultural highlights of the area. We’ll even give you our top tips on restaurants and shops that you need to check out! We can’t wait to welcome you to our thriving community, so stop by a branch of FVSBank today.