Many real estate experts suggest that you put at least 20 percent down on a home loan, but not everyone has that kind of cash on hand. Down payment assistance programs can make purchasing more accessible for first-time home buyers.
What are assistance programs?
Whether administered by a local or state housing authority, nonprofit organization or directly through a lender, down payment assistance programs can provide help to qualified home buyers. They grant a set amount to use on down payment or closing costs. Potential buyers may have the credit score and income needed to qualify for a mortgage but haven’t managed to save enough for a down payment. There are some options to help.
Eligibility
Financial assistance programs like these typically have strict guidelines regarding who can apply and qualify. These down payments boosts are really meant for people who might otherwise be shut out of the housing market. They are not necessarily designed only for low-income people, but rather working people who don’t have a down payment saved up yet.
Lenders will check your income, expenses and credit history to assess how much of a risk you are. It’s a good idea to have built up and checked on your credit score before applying. You can work on improving your score as best as you can before applying for a loan or down payment assistance. It can be a good idea to work on paying off existing debt and making all regular payments on time. In fact, each state has different rules on who exactly qualifies for down payment assistance based on income and price of the home you are buying.
Where to find them
Housing authorities in every state usually list these programs and participating lenders on their website. Reaching out to those lenders listed can be a great way to start the process. Not all lenders participate in these programs, but it’s still a good idea to shop around before jumping in. The funding or amount of money you receive depends on the state where you are buying a home. Some states base your award on the home’s sales price while others offer a flat amount.
It’s a good idea to find the down payment amount you can afford, compare it to the potential homes available, and not be afraid to turn to help if you need it.
