You dream of home ownership, but the down payment requirement dashes those hopes. I mean, who has tens of thousands of dollars sitting around? Many mistakenly believe they need an impossible 20% down payment to put toward buying a home. But the reality is homeownership can come at little or no up-front cost through down payment assistance programs. It was recently reported that over 2,000 buyer assistance programs exist in the U.S. – the average benefit between $10,000 and $12,000. Yet many of the home buyers I’ve worked with didn’t know these existed or how to access them. In fact, a recent survey suggested that less than half of non-homeowners are aware of any down payment assistance. So here are the basics on these programs as well as 3 easy steps to see if you qualify! 1. What are down payment assistance programs? Down payment assistance (DPA) programs have been around for some time. Their goal is to increase homeownership rates by closing the affordability gap for first-time buyers, minorities, low-income buyers as well as buyers who find themselves in over-priced areas because of their work. Designed to open access to the wealth-building opportunity homeownership offers, down payment programs offer gifts or forgivable loans that help with down payment and closing costs. These grants, loans, and other programs help eligible buyers achieve the dream of homeownership more easily and quickly. DPA programs are offered by federal, state, county or local government agencies, nonprofits, employers and even some lending institutions provide them. While these programs are managed and funded by a variety of administrators, each has specific requirements and limits affecting eligibility. 2. Who qualifies for down payment assistance programs? While many programs are available only to “first-time” homebuyers, you might be surprised to learn that first-time homebuyer is defined as someone who has not owned a home in three years. Even so, over 35% of all programs don’t require you to be a first-timer. Many DPA programs welcome buyers into the communities they serve by creating affordability solutions. More than 10% of DPA programs serve educators, officers and health care workers. This can prove especially beneficial in high-cost areas where these folks serve but can’t afford the sticker shock of owning. Occupation or status - such as veterans or households with disabled members - also create open doors to DPA programs. With so many categories that qualify, see which opportunities may be available for you. 3. What does it take to qualify for down payment assistance? Both the homebuyer as well as the property being purchased will have eligibility requirements unique to each program. Household income limits, credit score minimums and cash reserve requirements are assessed during qualification of the buyer. As for the property, it must serve as the buyer’s primary residence - although some multi-family properties may be allowed if the buyer is also an owner-occupant. Amongst other things, the sales price of the home is a factor and is typically an allowed percentage of the area’s median home price. Shockingly, this allowance could reach over $800,000 in certain higher-cost markets! 4. How do I find out if I qualify for down payment assistance? Uncover down payment programs available to you. Schedule a quick call to talk more or instantly access opportunities through Down Payment Connect. Down Payment Connect is a free tool that searches your eligibility in 3 easy steps:
In the National Association of REALTORS® 2021 Buyers and Sellers Profile, 61% of first-time homebuyers used savings to fund their down payment. Using down payment assistance may provide a great solution to reducing the burden of upfront cash required to own and leave you with a cash cushion needed for home maintenance, repairs and other expenses. Never want to miss a post? For more useful real estate tips & tricks, subscribe to our mailing list or contact us with any real estate questions. Authored by: Kat Medaries, REALTOR® MT Realty Advisors of Long & Foster Real Estate Village of Midlothian Sales, 1100 Jefferson Green Circle, Midlothian, VA 23113 Licensed to sell in the Commonwealth of VA | Equal Housing Opportunity For informational purposes only. Not intended as legal, financial or credit counseling advice. Seek the assistance of a professional should you require.
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