Purchasing a home for the first time can be a huge step towards growing your wealth. When all is said and done, you will have a home to your name and place to call your own. But taking the first steps can be intimidating. Not only will you need to qualify for a mortgage loan, but you will also need to come up with a sizable downpayment in order to secure that loan. Traditionally, purchasing a home requires you to come in with a downpayment that is 20% of the total price of the property. That can be easier said than done! This is especially difficult if you are a first-time homebuyer! At Gavish Real Estate we help many young, first time home buyers find the home of their dreams. One of the ways that this is possible is through Down Payment Assistance programs!
But how do they work?
Down Payment Assistance programs are usually administered by the state or the financial institution that is offering the loan. Additionally, there are non-profit organizations that offer Down Payment Assistance programs. Basically, these programs are aimed at helping first-time buyers afford a home because the sizable downpayment is often a deterrent.
These programs will either offer the Down Payment Assistance in the form of a grant, an interest-free loan, or as a loan that you pay off later on. There may be conditions to these loans though, such as you must use this residence as your primary residence or repay the loan before you can sell the home.
While down-payment assistance is available in all 50 states, it is limited to only qualified candidates. Down Payment Assistance programs will take into consideration your income level and how much the home you are buying is worth. Generally, these loans favor low-income families who make less than the median income for their location. This is not the rule everywhere though as some states allow more wiggle room in this regard.
You also may need to be a first-time buyer purchasing your primary residence. If you are on purchasing your second home you may not qualify.
Down Payment Assistance programs can cover a wide range when it comes to funding. On the high-end, a qualified buyer may receive as much as 20% of the total cost as a down payment. Some states do place a cap on how much you can receive in assistance. That number might be $10,000 or $15,000.
Any time you are taking out a loan, the lender will run your credit in order to determine if you are high-risk for defaulting on your loan. You will likely have to pass a credit check before being approved for your loan or receiving any Down Payment Assistance.