What is Down Payment Assistance and Do You Qualify?
WHAT YOU'LL LEARN
What is down payment assistance?
Programs and resources to help with down payment and closing costs
Ask your Mortgage Banker to see what you qualify for!
WHAT YOU'LL LEARN
What is down payment assistance?
Programs and resources to help with down payment and closing costs
Ask your Mortgage Banker to see what you qualify for!
Buying a home is a big financial decision. The costs can seem daunting, and for many people, saving for a down payment seems to be the biggest hurdle. But even if you haven’t had a chance save for a large down payment, there are still some wonderful opportunities for purchase your own home.
How Much Do I Need?
You may think that a 20% down payment is always required, but don’t worry — that’s not the case at all! There are Conventional programs that only require 3%. Meanwhile, FHA loans only require 3.5% down, and VA and USDA don’t require a down payment at all!
There are also down payment assistance programs (DPA) that can even help with closing costs. These programs not only help make homeownership a reality, but may also help you develop personal wealth and equity.
Many potential homebuyers are unaware that down payment assistance programs exist.
In fact, many homeowners are unaware that down payment assistance programs are available – and very accessible!
What Is Down Payment Assistance?
Down payment assistance is a special financing program that helps make homeownership a reality for homebuyers who otherwise may not have the funds for a down payment.
In order to qualify, both you and the home must meet certain requirements such as your state, income, credit score, and home price. If all requirements are met, you may receive the DPA funds as a grant toward your down payment and any associated closing costs. Some programs may require a minimum contribution from the buyers toward the down payment, but this varies by agency. Your Mortgage Banker can walk you through all the steps!
Who Offers Down Payment Assistance?
The cool part about down payment assistance is that it can be offered by a variety of different organizations and agencies. Most commonly, many state, city, and county agencies, known as housing finance agencies (HFAs), offer this financial assistance. Some housing authorities and non-profits offer similar programs. Sometimes, down payment assistance may also be available directly through your employer. (And don’t forget gift funds – money your friends and family can give you to help with the down payment.)
Your Mortgage Banker is a great resource to find out if you qualify. Not sure where to start looking for down payment assistance? Check out the Department of Housing and Urban Development’s list of state programs.
Who Qualifies?
Typically, these programs are for first-time homebuyers with low to median incomes. However, each assistance type and state have their own rules for eligibility. And remember that a “first-time homebuyer” is defined as someone who hasn’t owned a home in at least three years. Even if you’ve owned a home before, you could still be considered a first-time homebuyer.
Do you work as a first responder or other community hero? Some areas have created homebuyer programs to help people in specific careers, such as teachers, policemen, firefighters, and health care professionals. There are also minimum credit score requirements for each of the various programs.
Regardless of whether you qualify for a DPA, it’s always a good idea to be mindful of your credit.
Is Down Payment Assistance a Loan?
Sometimes yes, sometimes no. DPA can be a low-interest second mortgage you pay back over 10 years, for example, or it can be forgivable. And grant-based DPA doesn’t need to be paid back – you simply must meet certain conditions. For example, DPA recipients must stay in the home they purchase for a certain period of time, which is called an “affordability period.”
If you have questions about your edibility for down payment assistance, contact an Atlantic Bay Mortgage Banker today!