Top Assistance Programs that help with Home Buyers in the U.S.
Due to the fact that house prices are steadily increasing and interest rates are at an historical low, people are opting to buy houses now! However, the prospect of funding the down payment can be daunting and cause a lot of anxiety. However, it doesn’t need to because there are down payment assistance (DPA) programs that will provide the help you need.
Home Buyer Grants Are Allowing Renters to Become Homeowners with Down-Payment Assistance Programs
For a majority of homeowners, the biggest hurdle is the funding of the down payment. There are numerous first time home buyer mortgage options that can give you the assistance you need to get your down payment!
20% Down Payments May Not Be NecessaryA common misconception is that a 20% down payment is necessary in order to buy a home.
However, this is not true! The average payment is roughly 15%, while 4 out of 10 Americans put less than 10% down (with some being as low as 3% down)
It is imperative to show your lender proof of monthly income. If you cannot show the lenders any type of income documentation then you will need a no income verification mortgage which will require a form of down payment.
1. US Department of Housing and Urban Development (HUD)HUD gives grants every year to both local and state organizations through it’s HOME Investment Partnerships program as well as the Community Development Block Grant Program. These programs are key in getting your down payment funded!
2. Federal Housing Assistance (FHA) LoansLoans that are insured by the FHA only requires a 3.5% down payment. Due to the flexibility of this loan, if you have a cash gift you can in theory get a loan that is 100% financed! However, if not, this loan is still beneficial to its recipients.
FHA also has a wide variety of DPA programs that are available in a majority of states! So speak to your mortgage lender in regards to what your respective state offers.
3. HomeReady Loans Provided by Fannie Mae (and/or Freddie Mac)This program is relatively new compared to others and is applicable to both first time homebuyers and repeat homebuyers! This loan requires a minimum of 3% for the down payment so even less than the FHA loan! This loan is also beneficial to people with supportive families so if you parents are willing to help you with the loan, they can! Even if they don’t live with you! This loan also allows the down payment to come from a cash gift which not every loan offers.
4. Quicken 1% Down LoansThis 1% DPA program is offered by Quicken Loans and is meant to assist borrowers with lower incomes. It is technically a 3% down payment loan, however Quicken Loans provides the buyer with 2% credit so it technically comes out to 1%.
Not everyone qualifies for this loan but it is one of the better low-down-payment options available as of 2019. Not every lender offers this program but if they do you may want to see if you’re eligible.
There are also a few stately assistance programs that you should specifically know of:
5. California- GSFA Platinum Down Payment Assistance In California, if you are a borrower that has low to moderate income then this is great for you. This DPA program offers a non-repayable gift that can either go towards your down payment and/pr closing costs associated with the home.
This is a relatively newer program and since 2010, GFA Platinum has helped around 15,000 people to buy a home, and over $150 million in gifts have been given.
Benefits to this program are:
- Minimum 640 FICO score is needed
- The gift size can be up to 5% of the loan amount
- Program can be used for first time buyers and repeat buyers
- Has repayment options of 15 and 30 years
- Option to refinance loans is available
- The cash gift is not a second mortgage and will not create any type of lien against the home. In order to qualify you must fit within the program’s requirements!
4 More Popular Home Buying Grants for 1st Time Home Buyers When you are buying your first home you can feel completely overwhelmed. There are so many stress-inducing aspects to the home buying process that you can feel drained. However, to take some stress off your shoulders there are home buying assistance programs that can cover a good chunk of your expenses to turn owning your dream home into a reality!
1- Good Neighbor Next Door LoansThese loans are sponsored by HUD and provide assistance to people who work in “Good Neighbor” jobs when buying their first home. Whether you are a law enforcer, firefighter, teacher, or in the EMT field then you are eligible! These homes reside in HUD-designated revitalization areas and provide a discount of up to 50% off the listed price! Not only do you get a nice discount but a majority of these homes are available with down payments as low as $100 (as long as you are using FHA financing)! One of the major benefits to having this loan is that if you sell the home after 3 years is up, then you can keep all profit and equity for yourself and you do not have to pay HUD back in anyway!
To look for eligible home, just go to the HUD website and look up properties that are eligible in your area. Home are listed in 7 day intervals so check regularly!
2 – Dollar HomesHUD has another type of assistance program called “Dollar Homes.” This is when HUD sells fixer upper homes for as low as $1. This is a small number of homes that are taken by the FHA during the foreclosure process. Even though homes on this list can sell as low as $1 they are also just severely discounted and can be listed for a few grand depending on the home available! However, any home on this list must be reviewed by a home inspector to ensure your safety.
3 – Native American Direct LoanOver the past quarter of a century, the Native Amerivan Vertan Direct Loan Program has aided veterans of Native American heritage as well as their spouses. It allows Native American veteran borrowers to purchase homes on federal trust lands, with VA being the lender!
For the last 25 years, the Native American Veteran Direct Loan program has assisted veterans who are of Native American descent as well as their spouses to purchase homes on federal trust lands; the VA is the lender. If eligible for this loan then you do not have to make any type of down payment nor do you have to pay for private mortgage insurance (PMI). There are also other benefits to this loan like lower closing costs, low interest on 30-year terms, fixed loan rates, and the ability to reuse the benefits!
4 – State Specific Grant ProgramsWhile there are many grants available nationwide, there are also state specific grant programs that are tremendously useful! Make sure to speak to your mortgage lender to see which ones you would be eligible for.
OverallEven though the home buying process is extensive and daunting, there are programs available to facilitate the process and save you money in the long run! Make sure to speak to your local mortgage lender about any questions you may have about the offers available to you.