First-time home buyer programs in Missouri and St. Louis

What MHDC offers

MHDC is the state housing finance agency. It sets the interest rates and the allowed closing costs; you apply through an MHDC Certified Lender, and MHDC says the choice of lender does not change the rate. There is no minimum down payment or minimum loan amount.

• First Place is for first-time buyers and qualified veterans.
• Next Step is for first-time and repeat buyers whose income is above the First Place limits.

Both programs offer two versions: a loan with cash assistance, which comes with the 4% second loan, and a loan without it, whose rate is usually 0.25 to 0.50 percentage point lower. The first is for buyers short of cash. The second suits buyers who can pay their own down payment and closing costs.

How the 4% down payment assistance works

The cash assistance is a 100% forgivable second loan equal to 4% of the total mortgage amount, per MHDC’s program sheets. It is forgiven if you stay in the home and keep the original loan for ten years. After year five, the second loan shrinks by 1/60 each month until it reaches zero at year ten.

Example (for illustration): on a $200,000 mortgage, the second loan is $8,000. If you sold the home after seven years, 24 of the 60 monthly steps would have passed since year five, so about 60% of the $8,000 would remain to repay under MHDC’s schedule. Ask your lender how it applies to your loan.

The programs also have a recapture tax, which applies only if you meet all three conditions: you sell within nine years, you make a net profit after improvements and selling costs, and your household income is above the limit in the year you sell. Refinancing does not trigger it.

Eligibility

Next Step borrowers may also pair their loan with a mortgage credit certificate, a federal tax credit on part of the mortgage interest that MHDC says can return up to $2,000 a year.

Income and price limits for St. Louis

MHDC’s 2026 limits, updated May 12, 2026, apply the same way in the St. Louis metro counties, including the city of St. Louis and St. Louis County. The purchase price caps (Rev. Proc. 2026-23, effective May 6, 2026) apply across the state.

Source: MHDC, 2026 Income and Purchase Price Limits. Income counts everyone who will live in the home.

MHDC defines a targeted area as a census tract where 70% of families earn 80% or less of the statewide median income, or a tract of chronic economic distress approved by federal agencies. Your lender can tell you whether a home sits in one.

Programs in St. Louis: HomeSTL

The St. Louis Development Corporation (SLDC) runs HomeSTL for first-time buyers of a home in the city. It is a second mortgage at 0% interest with no monthly payments, forgiven at maturity (5 to 10 years, depending on the amount). The base loan is $40,000, with $10,000 more in a HUD Qualified Census Tract, so up to $50,000. It can pay closing costs, down payment, a permanent rate reduction and prepaid items, but no cash back.

Status as of October 13, 2026: SLDC says it no longer accepts reservation requests because all funds were reserved as of August 31, 2026. Buyers already on the waiting list could only be considered for closings on or before September 30, 2026. Check developstlouis.org/homestl for any new funding.

How to apply and where to get help

1. Take a homebuyer education course; HUD sponsors counseling agencies that give free or low-cost advice.
2. Find an MHDC Certified Lender through the MHDC website and ask for a quote on First Place or Next Step.
3. Ask the lender to compare the program with a regular FHA or conventional loan. Our guide to FHA loans and VA loans explain those options.

Funds are allocated first come, first served. MHDC’s current interest rates are posted on its rates page, which refused automated access when we checked, so we do not quote a rate here. MHDC also lists a home repair grant program (HeRO) for income-qualifying owners, through participating agencies.

See also our Missouri closing costs guide, the Missouri home prices page and buying a home in St. Louis.