Proposal would let MaineHousing offer up to $15,000 in grants to buy down mortgage rates for first‑time buyers

Representative Wayne Farren introduced LD2077 as a targeted affordability step to reduce monthly mortgage costs for low‑ and moderate‑income households and support workforce retention. The bill would authorize MaineHousing to provide grants up to $15,000 to reduce borrowers’ mortgage rates and allow an income tax deduction for private mortgage insurance premiums.

Witnesses from Habitat for Humanity of Maine and MaineHousing testified in support and offered operational suggestions. MaineHousing recommended restricting grants to participants in its first‑home loan programs to prevent use for flipping and to allow efficient administration (equal dollar amounts for participants rather than loan‑by‑loan calculations). Jorgensen provided a worked example showing a $15,000 grant blended into a $240,000 loan could reduce an assumed 6% rate to roughly a 5.5% blended rate and estimated statewide costs if paired with all MaineHousing loans.

Committee members asked about targeting (first‑time buyers versus broader buyers), preventing flips (minimum occupancy or resale restrictions), whether the funds are better used for down‑payment assistance, and how the grants would interact with existing MaineHousing programs. Habitat witnesses said the grants could complement existing down‑payment and first home tools and that tighter targeting would improve outcomes.

Next steps: staff and agencies will provide program design options, cost estimates, and data on first‑time buyer demographics and home types (including manufactured housing) for a future work session.