Getting a down payment is one of the most challenging aspects of buying a home. A lack of savings has been the number one reason why people don’t buy homes, according to a recent survey by Bankrate.com. Fortunately, there are several ways to find help with your down payment if you’re a first-time buyer or need some extra cash to make it happen.
What is Down Payment Assistance?
Down payment assistance is a grant or loan that helps you pay for your down payment on a home. This can be done by the government, a nonprofit organization, or an individual lender. The money is usually given as an interest-free loan that’s repaid over time—and it’s low to no interest because it’s intended to help people who have trouble saving up enough money for their down payment. This can help many people save time and money while they wait out the process of qualifying for financing with their lenders.
How much down payment assistance can I get?
The down payment assistance you can get depends on your income. The less money you have, the more assistance you’ll need to qualify for a mortgage. The size of your down payment is also important, as it determines how much of the home price will be covered by your own funds and not by a loan.
You can refinance mortgages if you think you have too much on your plate. According to experts at SoFi, “refinancing could help you save money over the lifetime of your mortgage.”
Where can I find a down payment assistance program?
The first place to look for down payment assistance is your state’s housing agency. These agencies will have information about the different programs that offer these grants, as well as what kinds of loans they’ll be accepted on and how much money you can apply for. In addition to this, HUD has a database with all the affordable housing programs across the country. The FHA also has a program called Single Family Housing Loans which offers up to 3% in funding for home purchases for low-income families.
Who qualifies for down payment assistance?
To be qualified for down payment assistance, you must:
- Show good credit. If your credit score is below 640, you may be eligible for a loan with a higher interest rate than those with better scores.
- Be a US citizen or legal alien. Some programs require you to have lived in the US for at least two years before applying for their assistance program, while others will accept applicants from all countries as long as they meet other requirements (such as having a verifiable income).
- Be able to prove that you have enough income to support yourself and pay back any loans or other debts after buying your home.
How do I apply for down payment assistance?
You’ll need to start by contacting your lender. Some lenders offer down payment assistance in the form of a gift, while others require you to use a state-sponsored program and pay back the loan once you sell your home or refinance.
Depending on whether or not you qualify for assistance from a lender, contact the state agency that administers your state’s homebuyer programs (if applicable). You can also apply for non-profit housing grants through organizations like Habitat for Humanity International and Operation HOPE. If there’s an affordable housing project in your area, check with them about available grants or loans provided by local governments and other community groups.
Our tips can help you get a down payment on any home. Whether you’re looking for a fixer-upper or something brand new, there are plenty of options out there to help make home ownership more affordable. If you’re ready to take the plunge into homeownership but don’t have enough cash on hand for the down payment, these tips will help.