Many potential first-time homebuyers struggle for years to save enough for a down payment. What they don’t realize is that there are many down payment assistance programs available that can make it easier to get into a home sooner. Let’s take a look at down payment assistance programs.
Who Can Receive Down Payment Assistance?
These programs are designed for first-time homebuyers. But even if you’ve owned a house before, you may still qualify. Most of these programs consider first-time homebuyers to be someone who hasn’t owned a home in three years or more. Additionally, some local programs are designed to help specific groups achieve homeownership, such as first responders, teachers or city employees.
Specific requirements for each down payment assistance program will vary, but general requirements usually include:
- Completing a home-buyer education course
- Not exceeding a certain income threshold
- Contributing some of your own money to the purchase
- Purchasing in an approved location
- Staying below a maximum home purchase price
What Types of Assistance are Available?
State housing finance agencies, as well as city and county governments, offer assistance programs to help meet affordable housing needs. Many of these programs work in conjunction with mortgages also aimed at first-time home buyers. Most programs offer assist buyers assistance with down payment and closing costs. Types of assistance will vary by location, but can include:
- Low-interest loans to be paid back over an extended period of time
- Zero-interest, deferred payment loans – In most cases, no payments are due until the home is sold, the mortgage is refinanced or reaches the end of the term.
- Zero, interest, forgivable loans – generally, these loans do not have to be repaid if the borrower still owns and lives in the home after a pre-determined number of years.
- Grants — in some cases, outright cash assistance that doesn’t require repayment may be available.
How Do I Apply for Down Payment Assistance?
Start by contacting your state’s housing finance agency to find out what types of assistance plans they offer. You’ll also want to check with your city and county about local grants and other programs available. Be sure to find out which mortgage lenders are approved to work with these programs to help ensure a seamless process.