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First Time Home Buyers and Down Payment Assistance

There is a common misconception among first time home buyers and experienced homeowners alike that anyone wanting to purchase a home needs 20% down on a mortgage. However, this could not be further from the truth. In fact, according to the latest Census data, 40% of Homeowners paid less than 10% down, and many homeowners secured a mortgage with as low as 0% down. What if you could afford your next dream home more easily than you thought? 

Homeownership is a dream that many Americans feel is out of reach. They dream of stability, of always knowing they have somewhere they can breathe easy. They dream of equity and of keeping the value of their investment. Americans dream of freedom,  of the ability to innovate and renovate their living space. The fact remains that over one hundred million Americans are still renting though. Essentially they’re paying off somebody else’s mortgage. If you feel that you would like to purchase a home but don’t believe it’s possible for you, there’s great news. Right now, there are several down payment assistance (DPA) programs across the country ready to help you move into your dream home.

Of the many down payment assistance programs across the country, most DPA Programs are offered based on the state, county, or city that you live in. Some operate nationwide but more often than not, they will be specific to your region. These programs began in order to help those families and individuals who are in good credit standing and have steady income but lack the capital for a 20% down payment on a mortgage. In some instances, you can have up to 100% of your down payment covered along with closing costs. 

What are the Benefits?

Families who use DPA programs save thousands of dollars. Moreover, these programs can help you move closer to where you work. They can help you buy a home in an area that will be better for your family. They encourage young and inexperienced home buyers to educate themselves. They also help families avoid the increasing costs of FHA and MI Premiums. These organizations are also helping families invest in themselves by reducing barriers to homeownership.

In addition, these programs help lenders provide more opportunities to First Time Home Buyers. Not all DPA Programs are identical though, so finding the right program for your family can require some research.

Common Requirements to Qualify

  • Income Restrictions May Apply

  • Credit Score Requirements

  • Zip Code Constraints

  • The Property Should be Owner Occupied

  • May be Limited to First Time Homebuyers

  • Mortgage May Need to be Funded Through a Specific Government Agency

  • Home Buying Education May Be Required.

Who is Eligible for Down Payment Assistance?

Depending on the DPA Program you decide to use, you will need to satisfy different conditions. Not all programs require you to be a First Time Home Buyer but there are many programs that do. By definition, a first time home buyer is someone who hasn’t owned a home in the last three years. Even if you have owned a home more recently than that though you could still qualify for a handful of programs. 

DPA programs may also require a home buyer education course. If you’re not sure where to sign up for a course, check the website of the program you intend to use. You may also need to consider the sale price of the home you intend to purchase and your credit history if you want to qualify. You should also contemplate whether or not you will be using a co-signer because some programs restrict who is on your mortgage paperwork. Mostly every program requires that you occupy the home you intend on purchasing. These DPA Programs are not designed to help investors afford their next income property. Finally, many programs are zip code specific, and some are nationwide, for example, HUD’s Within Reach program.

Homeownership Within Reach

HUD was an organization created in 1965 as a part of the Housing and Urban Development act and to this day they are providing support to Low to Moderate Income Families all over the country. In particular, their Within Reach Program has helped thousands of Americans get back up on their feet, and you can see some testimonials about their program on their website here. HUD’s down payment assistance program is a 2nd loan that is forgivable after five years. The program can fund 3-4% of your down payment. Assistance from this product can also help you pay for closing costs, prepaids, and origination fees. Like many other programs, there are some requirements.  

If you plan on applying for this type of assistance you have to confirm that the residence will be owner-occupied meaning you will be living in the home you plan on using the DPA to help you purchase. You will not be able to use Non-Occupant Co-Signer/Co-borrower to help you qualify for the first loan. This program is available in every state except Washington. Despite these restrictions, there is no limit on the sales price of the home you are purchasing. While the HUD program does not require you to be a first-time homebuyer, there are many programs that require will.

The Dream Maker

The Dream Maker Program is for first time home buyers who protect our national security. This program is a grant and doesn’t have to be paid back. Along with the HUD Program, this program requires that the property be owner-occupied and allows you to cover down payment and closing costs.  

These are just a few of the down payment programs available and even more are available in your area. So how do you find the right program for you? Talk to your local lender and see what kind of organizations they have partnered with. Then research online and see what all your options are. Once you’ve verified that you qualify for the down payment assistance program you are looking at then you are ready to apply. 

Buying a home is one of the biggest decisions a person is going to make, but nowadays it’s easier than ever. Wherever you are there is going to be a down payment assistance program available to you. All you have to is ask.

By Geoffrey Archer of OnQ Financial See their Down Payment Assistance Info Center here>


Charlotte NC homes for sale under $250,000 October 19, 2020
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Based on information submitted to the MLS GRID as of October 19, 2020. All data is obtained from various sources and may not have been verified by broker or MLS GRID. Supplied Open House Information is subject to change without notice. All information should be independently reviewed and verified for accuracy. Properties may or may not be listed by the office/agent presenting the information.