So how can you scrape together thousands of dollars to finally hold your first set of house keys? The good news is that there are plenty of down payment assistance programs available to help buyers overcome this huge financial hurdle.
Down payment assistance is any program or funding option, such as grants, zero-to-low-interest loans, and tax credits for eligible home buyers. They provide funds to help them pay for the down payment or cover closing costs. Most of these programs are managed and funded by the federal, state or local governments, each with its own requirements and limitations. You can work with any participating lenders who are trained on the program guidelines to apply and access these aids, or you can directly contact the government agency that’s offering the program.
The FHA Loans insured by the Federal Housing Administration (FHA), an agency within the U.S. Department of Housing and Urban Development (HUD), greatly benefit first-time homebuyers who have little or no money saved for a down payment and have lower credit scores.
The Rural Development Single Family Housing Guaranteed Loan Program offered by the U.S. Department of Agriculture, or USDA loans, have adjusted household income limits that vary per state and city.
For the USDA loans, borrowers must buy in areas with a population below 35,000, which includes many rural and some suburban areas. Meanwhile, the Good Neighbor Next Door (GNND) Program sponsored by the HUD, is designed to encourage the purchase of homes located in “revitalization areas” or those neighborhoods that have low household incomes and many foreclosed properties.
The home loans offered by the U.S. Department of Veterans Affairs (VA) allow veterans, active-duty service personnel, and select Reservists or National Guard members, as well as the spouses of military members, to own a piece of the American dream by requiring no down payment and competitive rates.
The GNND program, on the other hand, is specifically designed to provide housing aids to certain professionals such as law enforcement officers, teachers, and emergency medical technicians, with certain housing and loan conditions for each profession.
A typical class (which can be done online) covers topics such as how much home can you afford, how to comparison shop different real estate agents and lenders, what mortgage product should you consider, how to improve your credit score, and help you settle between your needs and wants especially when house-hunting.
However, you need to remember that:
There could be a significant slowdown in processing because of the circumstance mentioned above, especially in some areas.
If you really can’t get a big enough down payment for a loan, you have to make sure that your credit is as good as possible.
Fitting into the guidelines of any of those down payment assistance programs or low-interest loans can be more challenging than ever before because of the ongoing crisis.
Despite all of these, there’s plenty of optimism to be found amid this recent downturn. Don’t hesitate to ask your real estate professional to know what products are available in your market and ready to be taken advantage of.
