Missouri home loans: how homes are taxed and how MHDC’s cash assistance works

#How Missouri turns a price into a tax bill

Missouri taxes homes in two steps. First the local assessor sets the home’s market value and multiplies it by 19%, the assessment ratio state law sets for residential property. Then each local taxing district — school district, county, city, library, fire and others — applies its levy, stated per $100 of assessed value.

Assessments are updated every odd-numbered year, so the next statewide reassessment falls in 2027. At 0.79% of value, Missouri’s effective rate is below the national 0.89% and ranks 24th of 51.

#MHDC’s First Place and Next Step loans

The Missouri Housing Development Commission (MHDC) sets the rates and allowable closing costs on 30-year loans made by its certified lenders anywhere in the state. There is no minimum down payment or loan amount.

Next Step loans are 30-year FHA, VA, USDA or HFA conventional purchase loans, with a minimum credit score of 640 (lenders may ask for more). MHDC publishes the income and purchase price limits for each area on its lender resources page; ask a certified lender for current rates with and without cash assistance.

#How MHDC cash assistance is forgiven

The Next Step cash assistance is a second loan you never make payments on. It is fully forgiven after 10 years if you stay in the home and keep the original first mortgage. For the first half of that period the whole amount stays on the books; after that it shrinks a little each month until nothing is left.

Selling or refinancing early isn’t a penalty — you simply repay what hasn’t been forgiven yet — but it is worth knowing before you refinance when rates fall.

#A closing without a transfer tax

Missouri is one of 16 states with no statewide real estate transfer tax, so the deed records for a fee instead of a percentage of the price. At the CFPB’s typical range of 2%–5% of the price, closing costs on the median home would run $5,088–$12,720, mostly lender, title and prepaid items. The closing cost calculator breaks them out.

#The median-home payment and the income behind it

Missouri’s median home value is below the US median and the 13th-lowest in the country, while the median household income of $71,589 is the 9th-lowest. Homes cost 3.6 times income, lower than the US ratio of 4.4. Spending Freddie Mac’s 30% guideline of that income — $1,790 a month — supports about $234,000 with 10% down, about $20,400 less than the median home value.

Test your own income in the affordability calculator, change the inputs in the payment calculator, or compare owning with the median rent of $1,067 in the rent vs buy calculator.