Down Payment Assistance Programs: How to Find Help to Buy a Home

Getting into a new home may be easier than you think with the variety of down payment assistance programs available.

• Specialized mortgages can reduce the size of the required down payment.
• Some programs give you cash to apply toward your down payment.

Down Payment Assistance

When you’re buying a home, coming up with a down payment is often the biggest hurdle, especially when purchasing your first house. However, many buyers are misinformed on the topic of down payments. For example, many people think they need more money upfront than they really do. The traditional idea that a homebuyer needs to save up to 20% of the purchase price is outdated. In fact, the average new home buyer puts down about 7%. Mortgages through the Federal Housing Administration require 3.5% of the purchase price, and Freddie Mac loans require as little as 3%.

While mortgages with low down payments make homeownership much more accessible, buyers still need some cash upfront. A 3% down payment on a $300,000 home is still $9,000. You’ll also need another 2% to 5% of the purchase price for closing costs. That’s where down payment assistance programs come in, and they’re more accessible than many buyers think, with more than 2,000 programs available all over the United States. These down payment assistance grants usually come in the form of cash to put toward your down payment—many offer to match what you have saved up on your own.

Eligibility for Down Payment Assistance

Some home buying programs are only available to first-time purchasers. However, the federal government’s definition of a first-time buyer is anyone who hasn’t owned their primary residence in the last three years. For example, if you owned a home, sold it, and lived in an apartment for three years, you could qualify as a first-time buyer when you’re ready to purchase another house. 

Other factors that determine eligibility for assistance are your household income and the price of the house you’re interested in buying. Since the cost of living varies according to where you live, your situation will be evaluated based on the market where you’re buying. Each program has some minimum financial contribution you must make as a sign of good faith. The amount varies but could be as little as $500.

Where to Find Assistance Programs

Many homeownership assistance programs are managed locally, but state and federal plans are available as well. Reputable mortgage lenders are aware of what is available in your area and can help you apply. Here are a few of the most common assistance programs:

• The Federal Housing Administration loan helps first-time homebuyers get into a single-family house.
• The United States Department of Agriculture works to help promote ownership in rural areas of the country.
• The United States Department of Veterans Affairs gives loans to those serving in the military. Active duty members and retirees are eligible, as well as the spouses of those killed in the line of duty.
• The United States Housing and Urban Development offers multiple programs, including adjustable-rate and traditional mortgages and home equity conversion mortgages for elderly buyers.

Where to Learn More

If you’re looking for a home in the Nashville areas of Tennessee, Capitol Homes is here to help. We can help you determine precisely what you need to get into your new home, and we’re familiar with the assistance programs and their application requirements. Contact us today, and let’s work together to find help buying a home.

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Categorised in: Capitol Homes News

This post was written by Capitol Homes