Iowa first-time homebuyer grants and down payment assistance (2026)

FirstHome or Homes for Iowans: which IFA mortgage carries your assistance

FirstHome is the first-time buyer loan. IFA counts you as first-time if you have not owned your primary residence in the last three years. Two groups are exempt. The first is veterans discharged other than dishonorably who have never used a mortgage revenue bond loan such as FirstHome. The second is anyone buying in a federally defined Targeted Area ⁠¹⁠³. Only FirstHome borrowers can choose the $2,500 Plus grant ⁠⁵.

Homes for Iowans has no first-time rule. It uses one statewide limit for every household size: $171,360 in income and a $692,000 purchase price ⁠²⁠⁴. It pairs only with the 2nd Loan, not the grant ⁠³.

Both loans have the same basics. They are for buying a one-unit primary residence, not refinancing, on a 25- or 30-year term. They can be FHA, VA, USDA Rural Development, Fannie Mae HFA Preferred or Freddie Mac HFA Advantage loans ⁠³. You must move in within 60 days of closing ⁠¹. IFA says your credit score does not affect the interest rate. Both loans also come with a free Iowa Title Guaranty owner’s certificate if you ask for it at closing ⁠⁵.

The Nov. 2, 2026 change: Plus grant ends, 2nd Loan gets dollar caps

Through Nov. 1, 2026, IFA’s 2nd Loan pays up to 5% of the purchase price or appraised value, whichever is lower, with no dollar maximum. The FirstHome Plus grant pays $2,500 that is never repaid. You can take the grant or the 2nd Loan, but not both on the same purchase ⁠³⁠⁵. IFA announced on Sept. 17, 2026 that for loan reservations made on or after Nov. 2, 2026 ⁠⁶:

• The Plus grant ends for new reservations.
• A new 3% second mortgage pays 3% of the price, up to $10,000.
• The 5% second mortgage gets a cap of $15,000.

The repayment terms stay the same. The 2nd Loan has a 0% rate and no monthly payment. It comes due when you sell, refinance or pay off the first mortgage. IFA does not allow subordination, so a refinance means paying it off ⁠⁵⁠⁶. It is a lien to repay, not a forgivable loan.

Scroll the table sideways to see every column.

Amounts are based on the lower of price or appraised value ⁠³⁠⁶. Your loan officer’s reservation date, not your closing date, decides which rules apply.

FirstHome county income limits and Iowa’s Targeted Areas

FirstHome income limits are set by county and household size, with one column for 1-2 people and one for 3 or more. Outside Targeted Areas they run from $102,100 to $122,400 for 1-2 people and from $117,415 to $140,760 for 3 or more ⁠⁴. The purchase price cap is $566,000 everywhere except Targeted Areas, where it is $692,000 ⁠⁴.

Targeted Areas are census tracts where 70% of families earn 80% or less of the statewide median income. Buyers there get higher limits and do not need to be first-time buyers ⁠⁴. Fourteen counties have one or more targeted tracts.

Scroll the table sideways to see every column.

To find your figure, open IFA’s limits PDF and find your county. If your county lists target tracts, check the address with the Eligibility Quick Check, which flags Targeted Areas ⁠⁴⁠⁹.

Credit, DTI and the three courses IFA accepts

IFA sets a 640 middle credit score for every loan. Borrowers with no score can use non-traditional credit under the rules for their loan type ⁠³. The maximum debt-to-income ratio is 50% with an automated approve/eligible finding. Manually underwritten files stay at 45% ⁠³. The lender must apply whichever rule is stricter, IFA’s or the loan type’s ⁠³.

Homebuyer education is required for every borrower on both FirstHome and Homes for Iowans. You must finish it before closing, and the certificate goes in the lender’s pre-close package. IFA accepts three online courses: Finally Home!, Fannie Mae HomeView and Freddie Mac CreditSmart. If you have no internet access, an in-person course with a HUD-certified counselor counts. So does a HUD-approved course required by a local “community second” program, such as a city DPA ⁠³.

Military Homeownership Assistance: a $5,000 grant from a yearly pot

The Military Homeownership Assistance Program pays a $5,000 grant toward the down payment and closing costs. It can be stacked with the Plus grant or the 2nd Loan ⁠³⁠⁷. To qualify you need 90 days of active duty, which can be cumulative, from Aug. 2, 1990 to April 6, 1991 or from Sept. 11, 2001 to the present. Federally recognized injured service members and surviving spouses also qualify ⁠⁷. You need IFA approval before closing. The home can have up to four units if you live in one ⁠⁷.

The grant usually goes with an IFA mortgage. IFA will approve it with outside financing only if the lender shows that loan is a fixed-rate, fully amortizing mortgage costing less than the closest IFA product. First-time buyers using non-IFA financing still need homebuyer education ⁠⁷. Funding is set each state fiscal year. IFA reported $1,305,000 left for fiscal year 2027 as of Oct. 1, 2026 ⁠⁷.

No new mortgage credit certificates, but IFA repays recapture tax

IFA’s Mortgage Credit Certificate page says no funding is available for new MCCs. Only reissuance for existing certificate holders continues ⁠⁸. Iowa’s certificates were worth 50% of yearly mortgage interest, up to $2,000 a year, so a buyer who sees one advertised should ask the lender whether it is actually available ⁠⁸.

Federal recapture tax can apply when you sell a home financed with FirstHome, FirstHome Plus or the 2nd Loan. It applies only if you sell within nine years, at a gain, with income above the federal limit at the time of sale. For loans closed on or after Nov. 14, 2011, IFA reimburses the recapture tax you actually pay the IRS.

City and regional money in Cedar Rapids, Iowa City, Davenport and Sioux City

Iowa’s largest cities fund their own programs with HUD HOME or CDBG money. Most limit you to 80% of area median income and a lower price cap than IFA’s:

• Cedar Rapids, First Time Home Buyer Program. This is a forgivable loan of 10% of the price, up to $14,999. Buyers at or below 50% of AMI get the full $14,999. One-fifth is forgiven on each closing anniversary over five years. The 80% AMI limit is $81,300 for four people, and the price cap is $219,000. The city also caps housing costs at 31% of income and total debt at 43%, and you contribute $500 to $5,000 depending on your assets. The 2026 round opened March 30. As of April 2026 the city said funds were nearly gone and it had started a waitlist. The program reopens every March ⁠¹¹.
• Iowa City, Down Payment Assistance. Up to $24,999 from CDBG and HOME funds. You must finance with GreenState Credit Union or Hills Bank and take free education through Horizons. The income limit is $97,100 for four people (effective June 1, 2026). The price cap is $285,000, and you must have a DTI under 43% and contribute at least $250. As of July 2026 the city had allocated all funds and closed applications. It expected more funding around fall 2026 ⁠¹².
• Davenport, Homebuyer Down Payment Grant Program. A grant covering up to half of the lender’s minimum down payment plus closing costs, up to $10,000. It is for first-time buyers (no home owned in three years) with liquid assets under the program limit. The home must be a single-family house or duplex in Davenport. You need HUD-approved counseling, and the application can take up to six weeks ⁠¹³.
• Sioux City, MyPad. For non-owners buying a single-family house in Sioux City priced at no more than $219,000 (effective Dec. 1, 2025). The income limit is $73,600 for four people (effective June 1, 2025). You must be preapproved by a lender within 10 miles of the city. The city page we could read did not state the award amount ⁠¹⁵.
• ECICOG (Benton, Iowa, Johnson, Jones, Linn and Washington counties). An IFA-funded program for first-time buyers at or below 80% of AMI outside Iowa City, Hills, Cedar Rapids, Marion and Fairfax. You must stay in the home 5 to 10 years, depending on the amount. Johnson County is waitlisted. The other five counties were still taking applications on Oct. 20, 2026 ⁠¹⁴.

We could not find a current city-run down payment program for Des Moines on an official page. Polk County buyers can still use IFA’s higher Polk limits and its seven targeted tracts ⁠⁴.

Getting IFA help through a participating lender, step by step

1. Run the Eligibility Quick Check

   It takes a few questions and no credit check, and it tells you whether the address is in a Targeted Area ⁠⁹.

2. Choose an IFA participating lender

   Search IFA’s directory by county. “Preferred” partners have extra IFA training, and Spanish-speaking loan officers are flagged ⁠¹⁰.

3. Reserve the assistance before Nov. 2, 2026 if you want the Plus grant

   After that date, compare the 3% ($10,000 cap) and 5% ($15,000 cap) second mortgages ⁠⁶.

4. Finish homebuyer education

   Every borrower needs a Finally Home!, HomeView or CreditSmart certificate before closing ⁠³.

5. Gather income documents for the whole household

   FirstHome income counts the household against the county limit. Your lender collects the documents it needs to prove income and eligibility ⁠¹⁠⁴.

6. Let the lender verify and underwrite

   The lender checks eligibility, underwrites the loan and sends the pre-close package to IFA ⁠¹.

7. Add the military grant or a city program early

   The military grant needs IFA approval before closing ⁠⁷. City programs inspect the home and approve funds before closing ⁠¹¹⁠¹³.

8. Close and keep your papers

   Keep the 2nd Loan note for any future sale or refinance. If you sell within nine years and owe recapture tax, ask IFA to reimburse it ⁠¹.

Other states are compared on the first-time homebuyer grants page.