April 10th, 2020 12:21 PM by Jackie A. Graves, President
Buying a house is an expensive venture — probably the most
expensive purchase you’ll ever have. Your down payment is essential
to not only securing a loan but getting one with a low interest rate and
manageable monthly payments.
Not everyone has the financial means to put 20 percent down — a
common amount preferred by banks and one that allows you to avoid paying private mortgage
insurance. But forking over 20 percent upfront is not a requirement to
buy a home.
Here are some places to look for down payment assistance.
While programs exist at the federal level and even by lender,
the majority of down payment help is offered at the local level through state,
county and city government programs. They can come in the form of a loan or
Some mortgage lenders offer their own down payment assistance.
For example, Chase offers up to $3,000
that can go towards closing costs and down payment needs. While this program
isn’t just for first-time homebuyers, it does have other stipulations. You’ll
need to get a 30-year fixed-rate home loan and you’re required to make the home
your primary residence.
Down payment assistance can potentially give you money that can
help you afford a down payment or it can help with closing costs. Closing costs are fees and
charges that total roughly 2 percent to 5 percent of the loan principal. Even 2
percent on a $200,000 loan will equal $4,000 in closing costs.
Closing costs are an upfront payment you pay when closing on the
home. If all of your money has gone to saving for a down payment, you might
need help paying for closing costs.
Learn more about how
much you can afford through the Bankrate mortgage down payment calculator.
The vast majority of down payment assistance is offered to first-time
homebuyers. Many cities and counties have other housing programs
available, but down payment assistance is typically reserved for those who have
not owned a home in the last three years.
Many programs restrict owners of rental or investment properties
from participating. So you’ll need to be a first-time homebuyer and the home
should be your primary residence. If you’re unsure if you qualify, contact the
program before applying.
There’s no shortage of down payment assistance options, but
there’s no universal application that will go to all of them. Because of this,
you’ll need to apply to each one individually. Depending on the program, you
may call to see if you’re eligible, complete the application online or
in-person, and possibly take certain education courses.
Some programs require you to have a specific loan to qualify.
For instance, you might need an FHA loan instead of a
conventional loan. Aside from being a first-time homebuyer, eligibility is
usually based on income. Many programs target low-to-moderate income earners.
If you fall in a higher bracket, you may not qualify. You may also need to
contribute a certain percentage of your own income to get assistance.
Not everyone qualifies for down payment assistance programs. If
you’ve owned a home in the last three years, your income is too high or you’re
renting or investing in a property, you may not qualify for many programs.
However, there are other housing programs you may qualify for.
Visit HUD.gov, select your state
and then on “learn about homeownership.” From there, you’ll learn about ways to
avoid foreclosure, find home counseling services and getting money for home
renovations or repairs.
Depending on where you live and your needs, you may find housing
resources geared towards seniors, disaster relief and help to pay utility bills.
Home assistance programs are vast and vary by needs and location. You may find
that if you don’t qualify for down payment assistance, you might be eligible
for assistance in other ways.
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