Down payment assistance programs are administered by a local and state housing authorities and nonprofit organizations and are issued through a qualified lender. They provide a set amount of money to qualified homebuyers. Homebuyers can use the money to cover their down payment or closing costs. The money you receive through the program may be considered one of three things: a grant, an interest-free loan or a debt you pay off in the future. You’ll have to occupy the home as your primary residence.
The process of getting qualified for and using a homebuyer program is similar to any other mortgage application. Qualified lenders are trained on each specific loan assistance program and have the ability to complete financing without delays or prolonged closings.
A lot of people focus on the word “assistance” in down payment assistance, believing it is only for specific homebuyers and “targeted” neighborhoods of very inexpensive homes. In fact, homes in any neighborhood may be eligible. Loan limits range from $200,000 to over $700,000 in high-cost markets. On average, 70% of all homes for sale are eligible for one or more programs.
Not all down payment assistance programs have a first-time home buyer requirement. But for the programs that do, a “first-time homebuyer” is defined as someone who hasn’t owned a home in at least three years. This can make all the difference to applicants who were homeowners more than three years ago and are back in the market today.
Some homebuyer programs can have income limits of up to 120% area median income and higher. This can amount to well over six-figure incomes in some areas. In addition, some programs offer tiered assistance dollars at varying income levels. In this case, higher incomes might yield lower assistance amounts, but higher income isn’t an automatic disqualifier. For some programs, income limits are based on household size, so limits for a family of five are significantly higher than for a single person. Additionally, bonus or commission income earned does not necessarily disqualify you from these programs.
Your first step is to contact a Participating Lender for approval. Fill out the form below to be contacted by an approved lender within 24 hours.