Using a Down Payment Assistance Program may be your best bet if you want to buy a home for the first time and do not quiet have the funds for a down payment.

What is Down Payment Assistance?

Funding options or programs that makes it easier for homebuyers to obtain the funds they require for a down payment classify as down payment assistance. These initiatives are provided by both public and government organizations, typically as grants. They usually operate by either giving the Borrower the money needed for the down payment or forgoing the requirement for one.

Eligibility requirements for the down payment assistance programs typically include specific income levels that cannot be exceeded (for example, the maximum income shall not exceed 80% of the so-called Area Median Income).  Additionally, Borrowers may be expected to live in a property for a specific period of time.

How Does Down Payment Assistance Work?

Grants, forgivable loans, and deferred-payment loans are just a few examples of the different types of down payment assistance programs.

Grants:

The most popular type of down payment assistance program are grants.

Grants are intended for low-income homebuyers and don’t need repayment.

Grants for down payment assistance are typically funds offered by a State-run organization or the State itself. Nonprofit organizations may also offer grants.

Forgivable Loans:

Loans that are forgiven don’t need to be repaid as long as the Borrowers live in the home of choice for a set amount of time, typically 5 to 10 years.

Shall the Borrowers move before the period of forgiveness expires, the loan becomes payable.

Deferred Payments Loans:

These loans frequently have 0% interest rates and don’t have to be paid back unless the Borrower sells the property, refinances the primary mortgage into a new one or settles/pays off the original loan.

Who Is Qualified for Down Payment Assistance?

Most charity and government programs have strict qualifying criteria for the Down-Payment Assistance loans/grants like for example being a first-time homebuyer. If you haven’t owned a property in the past three years, most federal, state, and nonprofit programs will consider you a first-time home buyer.

In order to be approved for a DPA Program, the Borrower cannot own any rental or investment property, even if they did not have a primary residence in the preceding three years.

Are You Considering Applying for a Down Payment Assistance?

Our Mortgage Advisors specialize in Down Payment Assistance Programs and are readily available to help you obtain the information needed to make the best decision for yourself and your loved ones.

Please click here to connect with a Qualified Mortgage Advisor that will take you home using the Down Payment Assistance Program.