The HustleIssue #163Sunday, June 13, 2021Why is lumber is so expensive right now?An illustrated explainer of the factors driving up the market.BY ZACHARY CROCKETTNOTE: Thie week, we&rsquo
Everything You Need to Know About Down Payment Assistance Programs
Dated: February 9 2021
Down Payment Assistance Programs
One of the biggest barriers to homeownership is the dreaded down payment. Some potential buyers believe that they need 10% or 20% to put down on a home. The prospect of saving $20,000 to $40,000+ leads many would-be buyers to be continual renters.
First-time homebuyers may be able to take advantage of down payment assistance programs that can help cover the largest barrier many people have when buying a home.
Down Payment Assistance Options
First-time buyers don’t have the option of selling their current home to purchase a new one. While many buyers assume that they’re only a first-time buyer when they purchase their first home, there are some exceptions:
If you haven’t owned our own home for a three-year period or longer
You don’t own a rental property
People that own rental properties cannot get one of these special assistance programs. Otherwise, most state and federal programs will consider anyone that hasn’t owned a home for three or more years as a first-time buyer.
Who Funds Assistance Programs?
Down payment assistance is often funded by the government or charities. States and local lenders may also offer their own programs to help families purchase their own homes. Labor unions may also have their own assistance programs for members.
The funding can come from different sources, depending on the type of down payment assistance program.
Down Payment Assistance Programs
Multiple programs are available that can help first-time homebuyers get into their homes without a large down payment. You should look into local programs that may be available in your area, but the following programs can help, too.
USDA Loans are another government loan for properties that are in rural and suburban areas. While these loans are very beneficial for buyers, the loans must be for properties that are in zones that the USDA determines are “adequately rural.”
Restrictions include not earning more than 115% of the median income in your county and the property cannot be a working farm.
These loans eliminate the need for a down payment.
Veterans, members of the Armed Forces and spouses of deceased members (that qualify) can apply for a VA loan. You will need to meet certain requirements, and if you meet the requirements, you won’t need to pay a down payment on the home.
Down payment grants may be available to you for an FHA loan. There are a lot of grants, some which may be local, that can help you pay for your down payment. Chenoa Fund is one fund that the CBC Mortgage Agency offers to potential buyers to provide a 3.5% grant based on the home’s price.
An FHA loan is offered to first-time buyers by the Federal Housing Administration (FHA). Requirements are less strict, you don’t need a high credit score to qualify, and down payments can be as low as 3.5%.
You will have to pay closing costs, but the costs might be significantly lower than other forms of lending.
Traditional lenders will supply the loan that is insured by the FHA to lower the risk for the lender.
You'll also want to discuss your options with a lender to see what options are available that can help you fund your down payment. There are programs that can help make your dreams of ownership a reality.
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