Making the decision to buy your first home is one of the most exciting choices of your life. Making a down payment on said house will be at the top of your priority list. The reason a down payment is so important—aside from the fact that it may be the deciding factor between you and other interested prospective buyers—is the fact that the size of your down payment will directly affect the monthly loan amounts you will be paying for the life of your mortgage. Some banks won’t even approve you for a homeowner’s loan if you have a down payment below a certain percentage of the home’s value.
More than half of millennials are unable to save enough money to afford a down payment, which is preventing them from purchasing their first home altogether. While that may seem daunting, there is a bit of good news for people who are wary of meeting the minimum requirements. If a person qualifies, there are several ways to get financial assistance for a mortgage down payment, and it can come from many different sources. Down payment assistance can come from non-profit agencies as well as city, county, state, and federal resources. The purpose of these down payment assistance programs is to help people transition from renting to owning.
The best way to search for down payment assistance programs is to use online resources. Because there are a number of options that are specific to certain regions, you may also have luck in contacting local non-profit organizations or government offices to see what is available. In California, for instance, one of the best programs available is through the CalHFA. If you are associated with any banks, real estate agencies, or financial professionals, be sure to reach out to them, as well. Covering all your bases will prove to be invaluable, as you won’t want to miss out on an opportunity for financial aid.
The Federal Housing Finance Agency (FHFA) is an independent government-based organization that is focused on maintaining the health of the secondary mortgage market and the overall housing finance system. On their website is a list of articles including advice provided by the Bureau of Consumer Financial Protection describing the steps to take towards purchasing a first home.
A grant is the most desired outcome when it comes to receiving financial assistance because they do not need to be reimbursed. They do, however, come with stipulations. If you fail to maintain the requirements, then you may end up repaying the grant.
There are also loans available beyond a mortgage that can assist directly with a down payment. There are some circumstances where there is no limit on a loan, such as if you are a veteran getting help from the Department of Veterans Affairs, or someone getting assistance from the Federal Housing Administration.
Another method of getting help is to ask for money from family members. Make sure the financial transaction is legally documented as a loan or a gift so there are no misunderstandings among parties.