Home Loan Down Payment Assistance Programs
Down Payment Assistance for Home Loans
If you’re recovering from a turbulent financial phase or have a lower salary than most, there are down payment assistance programs that can help you get into a home.
Certain loan programs have less rigid qualifications. This results in flexible credit score requirements and a lower down payment. The Federal Housing Administration (FHA) home loan is one option. Considering those with credit scores at the 580 mark, it also has lower down payment options at 3.5%. For a home that costs $200,000, that would still require a down payment of $7000. And if that is still a difficult prospect, don’t give up hope! Because certain loan programs (like the FHA loan) works with low-income earners, and it also helps borrowers with down payment assistance.
Down payment assistance programs encourage home ownership for unconventional borrowing candidates. They provide funds for down payments, closing costs, principal reductions, repairs, and more. How much you receive will depend on your approval, your income in comparison to the area, and the home price. Down payment assistance is usually around 5% of the loan amount.
Types of Down Payment Assistance
There are many kinds of down payment assistance programs, you just need to know where to look!
Employer-Assisted Housing (EAH) Programs
Government and State Home Ownership Programs
Special lender programs like the FHA home loan offers a down payment of 3.5% with mandatory mortgage insurance. However, many lenders are offering other incentives. Check various banks to see who offers 3.5% down with no mortgage insurance. Special programs often don’t last long, so it’s worth looking into as soon as possible.
Employer-assisted housing (EAH) programs may be another option. Check with your human resources department. Typically, large public institutions (like universities), non-profit organizations, or unions offer this type of assistance for employees. They may also offer closing cost assistance and no interest in paying it back, but rules and qualifications will vary.
Down payment assistance programs can be state- or locally-sponsored by a government institution. For instance, the California GFSA Platinum Assistance Program offers a non-repayable grant up to 5% for moderate to low-income earners looking to buy a home. Also, the Department of Housing and Urban Development has a list of programs available in each state that may help with down payment assistance and other costs.
A seller can also provide down payment assistance. If they wish to speed up the home sale process, this can keep things moving along. They can contribute to title insurance fees, tax services, attorney fees, property taxes, or closing costs. However, there are limitations on how much a seller can help, based on circumstances like the type of home loan being used.
While you may feel like homeownership is out of your reach, it’s certainly not. There are many institutions ready to help you get one step closer. All you have to do is look.