Buying a home is one of the most important and expensive investments you can make. Everyone deserves to have a home, which is why we encourage you or your clients to use this use this down payment assessment tool to gain a thorough understanding of the types of assistance available.

What is a down payment?

A down payment is an investment one makes into buying a home and is calculated by taking a percentage of the purchase price. A down payment is required at the time of your home loan closing. Most loan programs require a minimum percentage of the purchase price as a down payment. The amount varies based on the loan terms, but the average is between 3% and 20%.

Closing costs are fees paid to lenders when a homebuyer closes on their loan. They are often unexpected costs that occur during the homebuying process and are typically up to 7% of the amount of your loan. Your realtor often uses closing costs during the negotiation process as well. Many assistance programs include assistance for closing costs as well. 

What are down payment programs?

Down payment programs offer assistance, grants, and other resources to help homebuyers afford the costs of buying a home. There are a variety of resources available from the down payment and closing cost assistance to tax credits and more. 

Loans

A loan is an amount of money that an organization lends with the expectation for it to be repaid. Typically loans have a high-interest rate, but many down payment programs offer loans with very little or no interest. Some of these loans you or your client won’t have to repay as long as you/they remain in the house for a specified time. Other types of loans allow buyers to pay less than the amount necessary to cover the down payment until they move when the reimbursement is expected to be repaid in full. These are just a few examples of the types of loans offered, so make sure to reach out to your realtor or lender to learn all options available. 

Grants

Grants are a set amount of money given to qualified homebuyers without the expectation of repayment. Many nonprofit organizations and some government agencies offer grants. Qualification depends on similar factors as those who qualify for a loan, including first time buyer status, credit history, income, location, and more.

Tax Credits

Between 2008 and 2019, first-time, qualified home buyers could receive a refundable credit of up to $8,000 on their taxes. Currently, there is a bill that will also offer qualified buyers a refund of up to $15,000 if passed. To know when and how to qualify for these credits, talk to a realtor, lender, or one of our partners. 

Who qualifies for down payment assistance?

Down payment assistance is typically reserved for first-time home buyers, but what defines a first-time home buyer varies, so make sure to check your local regulations. In some states, if you haven’t owned a home in over three years, you are considered a first-time home buyer. Eligibility depends on a variety of factors including income, credit history, current bills in place, and state of residence. 

Using this down payment tool can help you or your clients know if you/they qualify for assistance and qualified buyers receive an average of over $8000. To qualify for assistance, buyers are required to take a home buyer education course, like the one we offer. We are always open to new partners, so if you’re a realtor/lender who needs a resource to send their clients to for homebuying education courses, please contact us today!

How the down payment tool works

This down payment tool is a great way to discover available options for down payment assistance. First, search in the area for which you or your client plans to purchase a home. Next, sign up for our homebuyer education course, which is required to be eligible for any type of assistance. Once your course is completed, re-enter your information into the down payment tool for updated opportunities available. If you need more assistance, find a local realtor, lender, or partner, and feel free to visit our website to find one in your area.