6 Down Payment Assistance Programs You Should Know About
Buying a home means that you’ll need to have some money saved up in the bank, but there are some options for those who may need extra assistance for their down payments.
Depending on your situation, there’s a chance that you will qualify for a down payment assistance program offered through a government agency or private organization.
These assistance programs are typically for those who fall under the category of first-time homebuyer. Even if you have owned a home before, as long as it has been 3 years since you owned a home, the government still considers you a first-time homebuyer.
Not every state is created with requirements and options offered, but we’ve created a list of different down payment assistance programs that can be helpful. Make sure you research each program to see if it is offered in your state of residence and consult them with your lender to ensure which one is the right option for you.
1. Chenoa Fund
The Chenoa Fund offers 3.5% of down payment assistance, which is quite perfect since that is the down payment amount you would need for an FHA loan.
This is a nationwide program with the goal of making home ownership more affordable.
It is administered by CBC Mortgage Agency (CBCMA), a federally chartered governmental entity.
This aid comes in the form of forgivable or repayable second mortgage loan products.
This option can only be used with certain loans such as, FHA loans and Fannie Mae loans, although the Fannie Mae conventional loans are temporarily on hold.
Borrowers will also be required to work with certain lenders who are approved through the Chenoa Fund. These lenders have been given special underwriting authority that will make it easier for them to use the Chenoa Fund products.
Keep your savings intact and take advantage of this down payment assistance!
This is a Fannie Mae-approved second mortgage that assists with the down payment of the house. It is a second mortgage with funds from state and local governments and housing nonprofits which are brought together to equal your down payment amount, help with closing costs and even put towards minor renovations!To see what is available in your area, call your local HUD office to learn more about it!
3.HUD Home Programs
Speaking of HUD, let’s talk about them!
Although this is not an actual down payment assistance program, it is a way to get a lower down payment amount of 3.5% and HUD approved homes will be priced lower.
HUD houses are homes that were most recently purchased with an FHA loan. Due to foreclosure, the government now owns these properties, and HUD manages them until they are sold. HUD houses are purchased “as-is.” Which means that the government makes no warranties and will not undertake repairs.
If you choose to purchase a HUD home, you should pay for thorough home inspections to understand just what you are buying and what to expect after the close of the house.
If you absolutely cannot afford a down payment or need lower than 3.5%, HUD also offers special home buying programs that in some cases require no down payment, and in others offers homes at deep discounts, through such programs as The Good Neighbor Next Door, Section 8 Housing Choice Voucher Program and Section 184 Indian Home Loan Guarantee Program. Learn more about the HUD programs at their website https://www.hud.gov.
First time home buyers have HomePath properties as an additional option. Much like a HUD approved home that you can qualify for at a discounted price, HomePath properties are Fannie Mae-owned homes that are offered to the public after someone defaulted on their Fannie Mae loan.
Some of the many benefits of this option are a lower down payment and HomeStyle renovation loan eligibility. Not only that but buyers will receive closing cost assistance up to 3% of the purchase price. This is only available to those who take the online HomeReady course and end up buying a HomePath home.
A discounted home with low down payment requirements and closing cost assistance? Sounds like a win, win, win to us.
5.FHA, VA and USDA Loans
We know what you’re thinking. And you’re right, these are not actual down payment assistance programs. While that is true, the FHA, VA and USDA loans offer lower down payment options than other loans.
These are fantastic options for those seeking help for down payments, if you meet their requirements.
The FHA loans only require a 3.5% down payment based upon your credit score, the VA loan doesn’t require any down payment if you are a military service member or qualifying family member, and the USDA loans offer various options if you are living in a rural area or purchasing an older home that needs many upgrades.
6. eHome America Down Payment Resource Center
The down payment resource center is a tool that individuals can use to identify additional down payment assistance programs that they qualify for based on their unique demographics and circumstances. You can find this tool here!
If you’ve been discouraged in your home-buying process and find yourself without much cash on-hand, call a lender and see what your options are.
These down payment assistance programs and loan options are available to those who seek them out! Be diligent, prepared and well-educated in the home buying process and programs that might be a good fit for you.
If you are needing extra guidance in this area, take a look at our Homebuyer Education course, here!