Down Payment Assistance: 10 types to choose from!
1. First Time Home Buyer Programs
If you are purchasing your first home, or even any home after at least 2 years, you can head on over to the HUD website to get started on a new home buying process. Depending on your state and local programs offered, you may want to consult a local real estate professional and ask them what specific programs your area has available to new first time home buyers as yourself in order to help with down payment assistance and closing costs.
Programs for Public Housing Residence
For people in certain situations, there are opportunities to purchase the home you are renting through HUD’s public housing program. Public Housing Authorities (PHA) are able to sell their public housing home/apartment/condo to organization residences.
2. FHA Home Loan Program
FHA loans help more first time home buyers become homeowners more than any other program currently available. In order to qualify for an FHA loan, you can have a lower cred score and still only have to come up with a .5% higher down payment. This program helps buyers with some money saved but a low score.
It is best to work on improving your credit scores before applying for a mortgage because you will be able to secure better rates and give yourself a better purchase position.
A 580 credit score will allow you to qualify for an FHA loan with just 3.5% down. A $200,000 would require only $7,000 for your down payment. What many people are unaware of though is that your down payment for an FHA loan can be a gift from a family member or friend. This means you can get into your new home with little or no money upfront. FHA closing costs are rolled into the loan so you don’t have to pay them upfront.
FHA Loan Requirements
- 500-579 score/10% down
- 580+score/3.5% down
- Tax returns, bank account statements W2’s, and pay stubs required
- Primary home only, no investment homes
- Mortgage Insurance Premium is required
- Continual employment
3. USDA Loans
This home buying program from the U.S. Department of Agriculture is for average income home buyers in rural areas of the country. Almost 97% of the United States is in an eligible USDA location. USDA programs are amazing for first-time home buyers because there is NO down payment required. They are also less expensive than FHA loans.
4. VA Loans
The Veterans Administration provides great benefits to active and retired military personnel when buying/selling their homes. VA loans require NO down payment, and many lenders also offer transactions with no processing fees or extra fluff. Another great incentive to use your entitlement benefits and get a home for your family at the same time is in a simple fact that there is no mortgage insurance required for those who use a VA loan to purchase their home. This may seem like a small gesture to some, but to many, it is a savings of thousands of dollars over the life of your loan. Take advantage of the great benefit you earned by putting your life on the line every day. Start investing in your future by creating wealth in a real estate portfolio at very minimal interest/upfront costs to you.
5. 203k Rehab Loans
If you are the type of person who is able to see the quality of things even if they are not in the best condition, you should consider a 203K Rehab loan and secure contractors to complete the work the way you want things done. These loans are a great opportunity for someone to take a home that may need some minor-moderate repairs, facilitate the work that needs to be done with licensed and reputable professionals. You are able to pay the contractors to complete the repairs under your loan conditions so that you never have to worry about added expenses after you buy the home. Secure the funds and make the repairs all before closing!
These rehab loans are an extension of the FHA loan program. The 203K Rehab loans are an ideal mortgage for first-time home buyers purchasing a rehab home.
The requirements for FHA 203k loans are similar to a standard FHA loan, except the credit score requirement is 640.
6. Conventional 97% LTV 3% Down Program
Large government subsidized companies provide loans to consumers at very little down payment cost. A conventional mortgage allows borrowers to put a low down payment of 3%. The down payment can also be a gift from a friend or family member.
7. Good Neighbor Next Door Program
A $100 down payment is a great program for teachers, firefighters, and police officers. This first time home buyer program offered by HUD provides homes for these individuals like the teachers who create the foundation for the generation of tomorrow and those who put their life on the line and make someone else’s life more important than their own on a daily basis. Search for available properties in your area on the HUD home store website.
8. HUD Dollar Home Program
The Dollar Home Program is offered by the Dept of Housing and Urban Development. They are able to sell foreclosed FHA homes that have been on the HUD website for more than 6 months at a very low/no cost to the consumer. This is how local governments can offer homes to low-income families to help revitalize a community. You see what properties are eligible for HUD homes on the HUD website.
9. Home Ready Home Path Mortgage
The Home Ready Home path program is a great down payment assistance program for first-time home buyers. After taking a required buyer education course you can receive 3% towards your down payment and closing cost assistance. Most properties that are eligible for this type of loan for purchase will only require usually 3% of the purchase price for a down payment. This down payment assistance program secures the full amount you will need for the down payment and a good realtor will also negotiate seller concessions in order to help you with any extra costs needs for closing.
This down payment assistance program is exclusive for first-time home buyers who plan to live the property as their primary residence. You can see what homes are available on the hud home store website.
10. Native American Direct Loan
The Native American Direct Loan (NADL) is a great down payment assistance program for Native American Veterans. This program allows for qualifying Native Americans to purchase property that qualifies on their respective recognized trust land.
- Must have a valid Certificate of Eligibility from the Veteran’s Administration
- The property must reside on a Federally recognized trust or Alaska Native corporations
- NADL is for owner occupants only, no investment properties
- A credit score of 640+ is required
- Borrowers with steady income
Eligible Native American Veterans are able to finance the purchase, construction, or improvement of homes on Federal Trust Land, or to refinance a prior NADL to be able to qualify for a new reduce the interest rate.
Ask your local real estate agent/lender
The final step in our 3 step home buying process is to find a lender that fits your unique needs and can offer you one of the 10 down payment assistance programs listed above in order to help you make the home buying experience even more affordable and attainable than you may have ever imagined. Make sure that once you are paired with a licensed real estate professional that can guide you the rest of the way to becoming a homeowner that you mention the down payment assistance program that fits your unique situation and see what options are available for you today!
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