If you want to buy a home but you don’t think you have enough for a down payment, consider looking into down payment assistant programs. There are private organizations that can help; plus, many states offer grants to qualifying homebuyers. As a first-time homebuyer, you have plenty of tools and resources, including experienced Loan Originators, who can help you become a homeowner.
When it’s time to buy a house, you will likely need to pay a percentage of the purchase price as a down payment. Different mortgage programs, like FHA, conventional, and VA loans, require different amounts – or even none at all. It’s important to talk to a Loan Originator to find out which program is right for you. Down payment assistance are grants, loans, or other programs offered by different types of organizations and usually given to qualifying first-time homebuyers – although some programs are offered to people who have purchased homes before.
Grants are perhaps the most desirable form of assistance because they do not have to paid back. A grant is money that is provided as a gift with no need for repayment. If you’re looking for assistance with your down payment, this is the first type to look for.
Another type of down payment assistance is a forgivable loan. Lenders who choose to offer this type of loan provide it with an interest rate of 0%. Borrowers will not need to pay it back after a certain number of years. The lender will determine how many years must pass before they forgive the loan, and if you move, sell, or refinance before that, you will have to pay back the loan.
Another possible option is to take out a second loan with little-to-no interest. This loan would cover the down payment and would need to be repaid each month alongside your first mortgage.
You may be able to qualify for another kind of second loan that covers your down payment known as a deferred-payment loan. This type of loan typically does not need to paid back until you sell or refinance your first mortgage or pay off your first loan. Deferred-payment loans do not get forgiven and need to be paid off if you leave your house.
Another option is to find a matched savings program. In this instance, you will deposit money into an account with the organization offering the assistance and they will match the amount of money you deposit. This way, you can use both the money you provided and the money the organization gave to cover your down payment.
Down payment assistance typically requires an application and bases eligibility on your household income and credit history. It’s likely you will need to take a homebuyer education course. There might also be requirements around where the house is located and there will likely be a maximum purchase price. While it’s often meant for first-time homebuyers, repeat buyers may still be eligible since these programs tend to define first-time homebuyers as someone who hasn’t bought a home within the last three years.
If you want to find a program, be sure to check with your city and county governments. Or you can visit the US Department of Housing and Urban Development (HUD) website. You can also reach out to one of our experienced Loan Originators who will be happy to help you find a program as well as answer any questions you have. Once you’ve found the program you want to apply for, the next step is to apply with one of their approved lenders.
Be sure to contact us to find out more about down payment assistance programs. We’re here to provide answers to all your questions and guide you to your goal of homeownership.
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