Buying a house means making an investment. Most individuals will need to take out loans or a mortgage in order to cover the cost, but those don’t cover the down payment which is required in most cases to secure the property. For individuals who do not have enough funds to make a sufficient down payment (usually around 3 to 3.5% for most loan programs) or are just seeking assistance to make the buying process more manageable, looking for down payment assistance programs is a wise idea. It is important to note that not everyone will be eligible for down payment assistance, but it doesn’t hurt to seek out your options.
From grants and loans to tax credits, there are thousands of down payment assistance programs across the country. Looking into these options and determining your eligibility can help avoid some stress and prevent financial burden. Both the homebuyer and the property must meet certain qualifications in most cases in order to be eligible for assistance.
In order to receive assistance with the down payment, the homebuyer must be planning to use the property in question as a primary residence. In other words, the homebuyer must live in the property and contribute in some way to the community. While this naturally applies to single-family houses as well as condos and townhouses, it can also apply to multi-family residences in which the homebuyer plans to live, too.
Additionally, the home sale price will also be considered in comparison to local average home prices. Down payment assistance may be offered up to or above a certain point based on a percentage of average home prices in a given area. Down payment assistance is designed to provide lower or moderate income families an opportunity to buy their starter home. It is not designed to assist above average income households the opportunity to buyer their dream home.
A large number of down payment assistance programs are tailored to suit specific demographics, meaning that only certain individuals will make the cut. The largest criteria for a lot of these programs is that the individual must be a first-time homebuyer. According to the Department of Housing and Urban Development, a first-time homebuyer is someone who has not owned a home in three or more years.
A decent percentage of programs available also target individuals who will make a difference in their communities. Those who hold jobs in community service, education, or healthcare, for instance, may have an advantage when applying for these programs.
Homebuyers’ financial statuses will also influence eligibility and access to down payment assistance programs, so applicants should be prepared to provide credit information as well as household income.
- Most require the individual to have not owned any homes in the last three years
- Have a minimum credit rating around 620-660 (pending on the program)
- Have shown the ability to pay rent on time
- Have not outstanding large collections or liens
- Have had stable job history for the last two years