The inability to put down a down payment on a home is a common concern among home buyers in the process of buying a home. You may not have the money and are turning to family for gift funds or have the money in a savings account, but don’t want to spend it all. Whatever the reason, there are several options available to you if you plan on obtaining down payment assistance.
What is Down Payment Assistance?
Down payment assistance comes in the form various programs available to help home buyers like you get the necessary down payment for their home. The goal of these programs is to make housing more affordable for low to moderate income individuals, but high income individuals can sometimes qualify as well.
Know the Types of Down Payment Assistance
In order to get down payment assistance, you must first qualify for a mortgage. Even then, your lender may impose income limits, meaning that you will only be able to get assistance if you meet the maximum allowable income. There are a number of options available for people who need to purchase a home with a down payment but need assistance:
- Grants: Funds that you do not need to pay back as long as you own and live in your home for a specific period of time.
- Low interest or interest-free second mortgages: A loan with low or no interest rates and the payments are deferred over a specific time period.
- Special mortgage programs: Some lenders and programs offer specialized down payment assistance, which differ depending on the lender and type of loan.
Down payment assistance is not free money. Depending on where you live, average assistance can sometimes range from $5,000 to $20,000. Asking a trusted lender or state housing authority about these programs and options is always the best and first place to start.
Take a Home Buyer Education Course
In order to receive down payment assistance, most of these programs will require applicants to take a home buyer education course. These courses are critical to the success and happiness of a homeowner, as they teach home buyers everything they need to know about the process to help them make informed decisions. For example, creating a budget and knowing how much of a home they can afford. Buyers must take these courses before the program or agency will qualify them for down payment assistance.