Down payment assistance: how to find a program for you

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When taking out a mortgage, you may need to provide some money as a down payment. Requirements vary, but even a small down payment can become a problem if you’re strapped for cash.

Down payment programs can help you close the gap between what you’ve saved and what you need to put aside.

There are more than 2,500 grant and loan programs nationwide that can provide down payment assistance, according to a report from the Urban Institute. Better yet, they’re not just for first-time buyers.

Here’s what you need to know about mortgage down payment assistance programs:

Who is eligible for down payment assistance programs?

Most down payment assistance (PAD) programs are limited to first-time buyers, But it’s not always the case.

Each program sets its own requirements and its own definition of “first-time home buyers”. You may be eligible even if you have previously owned a home.

Some programs also aim to help people in particular professions, such as the military, firefighters, teachers, healthcare workers, and law enforcement.

Here are some common requirements for down payment assistance programs:

  • You are a first-time home buyer (you haven’t owned a home in the past three years).
  • Your income meets the program requirements.
  • Your credit score meets the minimum program criteria.
  • The house you buy will be your primary residence.
  • The mortgage meets certain loan limits.
  • You may also need to take a training course for home buyers.

Requirements vary from program to program and some are less restrictive than others. If you are not sure if you qualify, contact the program and ask what your options are.

Advice: You will also need the cooperation of your lender to use down payment assistance for your mortgage, so check with them before you apply.

Keep reading: How much down payment do you need to buy a house

Types of down payment assistance programs

Before submitting your application, it is important to know if the loan needs to be repaid later.

Some programs never require repayment, while others provide loans that must be repaid when you sell the house or refinance your home. mortgage.

Subsidies

Down Payment Assistance Grants do not need to be repaid, so it can be an attractive option for qualifying borrowers who do not have the necessary savings for a down payment.

Down payment assistance – for grants and loans – can range from $ 2,000 to over $ 39,000, according to the Urban Institute report. The programs usually explain how you can use the funds.

For example: You may be able to use down payment grants to cover closing costs such as title insurance, registration fees, and mortgage discount points. Other programs allow you to cover only the down payment.

To find: How to save for a down payment on a house

Loans

Down payment assistance loans are set up second mortgage and will need to be repaid at some point, so it’s important to know when the bill will be due.

Depending on the program, there are different types of loan assistance:

  • Loans-grants: If you live in the house for at least a specified period (about five to 15 years), the lender cancels the debt. But if you move, sell the house, or refinance the mortgage before that period is over, you will need to pay off the loan.
  • Deferred payment loans: These loans will need to be repaid, usually when you move out, sell the house, or refinance the mortgage.
  • Low rate loans: It works like a regular loan, which you’ll pay off along with your primary mortgage.

Learn more: 5 types of mortgages: which one is right for you?

How to find down payment assistance programs

Some federal government loan programs offer help with the down payment, while other programs can be found at the state, county, and city levels. Potential buyers will have to research and apply for them individually, as there is no universal application.

To verify The State-by-State Roundup of Credible first-time homeownership programs, or search for it yourself. Here are a few things to keep in mind when doing your research:

Start searching with your national real estate agency

State Housing Agencies are nonprofit organizations that provide information about affordable housing, financial assistance, and community development activities in your state. It is your best bet to find state specific information.

Head to your state government site if you want more information on housing programs, or search Google for a “down payment assistance program” in your state.

Do not forget the departmental and municipal real estate agencies

Your county or city may offer additional programs, so check your state’s website for a link to your locality’s website. Once there, look for links to housing benefits or utilities.

If you can’t find what you’re looking for, try a Google search for “down payment assistance programs” in your city.

Work with an approved lender

Once you find a down payment assistance program that is right for you, you may want to find a lender who is willing to work with you.

Credible makes it easy to find lenders in your area. You can view the prequalified rates from all of our partner lenders in your area – and the process can be completed entirely online. Start your home loan today.

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About the Author

Kim porter

Kim Porter is an expert in credit, mortgages, student loans and debt management. She has been featured in US News & World Report, Reviewed.com, Bankrate, Credit Karma, and more.

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