Who Qualifies for Down Payment Assistance?
You may get more than $8,000 through down payment assistance programs. This can help reduce the amount you have to save for a down payment significantly. There are more than 2000 of these programs nationwide that help homebuyers by offering low-interest loans. However, there are certain first-time homebuyer qualifications that you have to meet.
What Are the First-Time Home Buyer Qualifications?
About 60 percent of the programs only allow first-time buyers or repeat home buyers that have not owned a home in three years to apply for down payment loans. But about 30 percent of the programs do not include the requirement for first-time buyers. Most of the programs also have requirements for income thresholds, cash reserve, and credit score minimums.
Homebuyers are often required to have a homebuyer education and some money down to make it easier for you to buy a home. People with professions that provide community service are more likely to be approved for down payment assistance. These include educators, health care workers, veterans, and protectors.
What Are the Property Qualifications?
The property you want to buy must be your primary residence, not a commercial property or a real estate investment. You are only eligible for most of the programs if you are buying a single-family home, townhome, or condo. There are programs that will allow 2 or 4 unit multi-family homes if you are also an owner occupant.
Programs also have home sales price criteria that are based on a percentage of the area’s median home price. In some areas, the home price limit is $250,000 while in some high-cost markets it can be more than $700,000.
Is Down Payment Assistance Right for You?
First-time homebuyers who have student debt or other payments that make it hard for them to save for a down payment can benefit from down payment assistance. Even if you are not stuck with debt you can still save more than $17,000 if you get a loan from one of these programs. Generally, if you intend to buy a $200,000 house and you need percent down to qualify, then consider applying for a type of DPA loan that is suitable for you.
Types of Down Payment Assistance Programs
The main types of loans offered by down payment assistance programs include:
- Zero-interest forgivable loans: Loan is forgiven after a set number of years (5 to 20 years) and only has to be paid when you move, sell, or refinance
- Loans with deferred payments: You only have to pay if you sell, refinance, or move.
- Low-interest loans: You have to pay down this loan over a certain period such as 10 years
- Grants: This is an outright gift of money that you do not have to repay.
The amount you can get from DPA programs can vary depending on where you reside. For example, people in Seattle can get as much as $50,000 in DPA loans. If your application for a DPA loan is successful, consider working with an experienced real estate agent through the Home & Land website to help you find the home of your dreams.