What Are The Types of Down Payment Assistance Programs?
As said earlier, all organizations offer a bit different procedure to participate in down payment assistance opportunities. For example, some companies allow loans, whereas some lenders provide grants. Overall, there are four main types of down payment assistance programs.
- Grants
You don’t have to repay the amount that has been borrowed.
- Loans
In this type of DPA program, you pay second mortgages monthly along with your primary mortgage.
- Deferred loans
This program allows second mortgages with deferred payments that need to be paid when you sell, move, or refinance.
- Forgivable loans
This DPA program offers second mortgages that are forgiven over a set number of years (mostly five, but maybe more than 15 or 20). These loans only have to be repaid if you sell, move, or refinance too early.
What are the Eligibility Criteria for Down Payment Assistance?
Each state of the country has its own rules and policies for determining eligibility. Also, not everyone can qualify for a down payment assistance program. Moreover, it’s highly based on your income and how much home you’re buying.
For example, in Virginia, your earnings have to be at 80% or below the area median income where you’re deciding to buy. However, in other states, the limit may be as greater as 120%.
Besides that, if you’ve owned a home previously, you’re not able to fulfill the eligibility criteria. Because mostly DPA programs are limited to first-time consumers. Also, in some cases, homebuyers need to attend special training to get in-depth knowledge of financial responsibilities and learn about the mortgage process of owning a home.
How Much Funding Is Available?
The amount of money you receive through a down payment assistance program directly relates to the state conducting the funds. Some states base your award on the house’s sales price, whereas others offer a flat amount. For example, in Virginia, the amount can increase as high as 20% of the purchasing charges. On the other hand, New York caps assistance at $15,000.
How to Find Down Payment Assistance near You?
The best and effective way to find a down payment program for which you’re eligible is to communicate with your loan officer. They may know about local grants and local programs. Furthermore, they can tell you which programs the lender usually accepts since not all lenders accept all DPAs; it is specified.
Besides that, you can research on the internet by mentioning your state and city. This will further aid you in finding current programs specific to your residential area that you might be able to apply for.
Conclusion
If you wish to become a homeowner soon but don’t have enough cash for a down payment, then a state or local down payment assistance program can assist you.
The financial help comes through state housing finance agencies and cities, countries, nonprofit organizations, and employers. Some down payments have lower rates than your first mortgage, some are interest-free, and others require the same or a higher amount than that.
You all need to go through the relevant information before enrolling in the DPA program. In this instance, our massive guide can help and lead you to explore down payment assistance.
