Recent college or university graduates are not usually considered prime candidates for home ownership. But for those fortunate few for whom buying a home is a realistic possibility, there are a few programs available that can help you out.

For most new graduates, buying a home is one of the furthest things from their minds. Many have massive debt loads from student loans and are taking low-paying entry level jobs in their chosen fields. In the current economy, many are even moving back home with their parents until they can afford a place of their own.

But for some, post-graduation is an attractive time to buy a home. Many young people get married during the year after graduating, and are looking to set up a household, with two incomes to pay the bills. Those who have completed graduate school may have secured a well-paying, professional position they intend to remain in for some time and often have relatively little student debt, owing to paying their way through school on graduate assistantships.

State mortgage help for grads

If you attended college or graduate school in Michigan or Ohio, you might be able to take advantage of special state programs for graduates. Those who've graduated from a Michigan college or university within the past three years can qualify for special assistance and low interest rates through the Michigan State Housing Development Authority.

To qualify, properties purchased under this program must be one of eight Michigan cities: Detroit, Benton Harbor, Pontiac, Hamtramck, Highland Park, Saginaw, Flint and Muskegon Heights.

Recent graduates of Ohio schools can qualify for a grant equal to 2.5 percent of the home's purchase price through the state's Grants for Grads program. To qualify, you must have originally graduated from an Ohio high school, and earned an associate's, bachelor's or advanced degree within the past 18 months. The grant is in the form of a loan that is forgiven after five years if you continue to reside in Ohio.

Other states may offer similar programs; check with your state housing authority or department of higher education.

Special deals for alumini

In some areas, mortgage lenders offer special deals for graduates of area schools. For example, MFG Mortgage Services in Reno, Nev. offers a 25 percent reduction in its mortgage origination fee for graduates of the University of Nevada-Reno. Graduates of The College of New Jersey can save $500 off closing costs by getting their mortgage through Fairway Independent Mortgage of Sun Prairie, Wis.

Another way to save on a home loan is through your university credit union. Even if you didn't join as a student, most university credit unions are still open to alumni, and may offer better mortgage terms than you can find on the commercial market, as well as offering special programs for alumni.

And don't forget about your alumni association. Many alumni groups have arranged for special insurance rates for their members, which can add up to several hundred dollars a year on home insurance.

Low- to moderate income assistance

Finally, you can make your status as a struggling recent graduate work for you. Many states, as well as the federal Department of Housing and Urban Development, have mortgage assistance programs specifically targeted toward low- and middle income earners, particularly first-time homebuyers.

Some of these work in conjunction with FHA loans, which can be a very good deal for young people who are just starting out and don't have a lot of money or an established credit history. Also, with an FHA loan, you can count your last two years of college or graduate school as part of your employment history, which can help you qualify for a loan.

Buying a home shortly after graduation isn't for everybody. But if you think it makes sense for you, there is assistance out there that can help you make it a reality.

Published on January 9, 2009