Down Payments & Grants That Can Assist With Purchasing a House
Buying a home can be difficult, but there are programs in place to help you get started. Easy Solutions is one of them! Easy Solutions Home provides down payment assistance and grants that assist with purchasing a house. Easy Solutions has options for first-time buyers, homeowners looking to refinance or purchase another property, and even those looking to buy land in San Benito, Texas!
Down payment assistance (DPA) offers grants or low-interest loans to first-time homebuyers, reducing the amount they must save for a down payment. In the United States, there are over 2,000 of these programs. Many are managed by the state, county, and city governments. DPA programs vary by location, but many home buyers who meet specific requirements may be eligible for thousands of dollars in down payment and closing cost assistance.
How the Down Payment Assistance Program Works
Down payment assistance (DPA) programs provide loans or grants to home buyers to reduce their need to save for a down payment.
If you meet the requirements, you may be eligible for an outright grant or a low- or no-interest loan to cover your down payment. Some DPA funds can also be used to cover closing costs. The majority of DPA programs are only available at the local level. And eligibility requirements differ from program to program. Many DPAs require you to be a first-time homebuyer (you haven't owned a home in three years), have a good credit score, and have a low or moderate-income. However, not all programs follow the same set of rules.
It's also worth noting that many DPA programs have a list of 'participating lenders' with whom they collaborate. As a result, you may have to select a lender who is approved by your assistance program.
Different Kinds of Down Payment Assistance Programs
Down payment assistance is classified into four categories:
- Grants — Money is given as a gift that does not have to be repaid
- Loans — Second mortgages that are paid every month in addition to your primary mortgage.
- Deferred loans are second mortgages with deferred payments that must be made only when you move, sell, or refinance.
- Repayable loans — Second mortgages that are forgiven over time (often five, but maybe up to 15 or 20). These must only be repaid if you move, sell, or refinance too soon.
Some DPA loans are interest-free, while others require the same or a higher interest rate than your first mortgage.
A quick count of the programs listed below indicates that all four types of DPA are common. Grants are the most common, but only by a small margin.
Who Qualifies for DPA?
Typically, down payment assistance programs are intended for first-time homebuyers. On the other hand, a repeat home buyer is often considered a "first-time buyer" if they haven't owned a home in the previous three years. Other requirements may include income limits, purchase price caps, and purchasing a home in a qualified area. Many programs also necessitate homebuyer education.
Every down payment assistance program is unique in its way. The exact eligibility criteria will vary depending on where you live and what programs are available.
Many of them follow similar guidelines, such as:
- Only first-time homebuyers are eligible.
- Buyers must be on a low to moderate-income.
- The house will be used as a primary residence.
- The house is located in a "targeted" census tract.
- The DPA is used in conjunction with a mortgage program that has been approved.
- You work with a reputable mortgage lender.
Programs vary by ZIP code, but if you buy in a so-called "target area," you're more likely to get more money and qualify more easily. Your lender can assist you in determining whether your property is eligible.
How to find down payment assistance near you
Typically, down payment assistance programs are very localized. There are a few national DPAs and numerous statewide DPAs, but the vast majority are run at the city or county level.
Speaking with your loan officer is the best way to find down payment assistance programs you qualify for. They are likely to be aware of local grants and loan programs that can assist you. They will also know which programs the lender will accept (not all lenders work with all DPAs).
You can also Google "down payment assistance grants in [state, county, or city]" if you want to do some independent research.
This will assist you in locating current programs in your area that you may be able to apply for.
How much of a down payment grant am I eligible for?
DPA programs are a bit like a ZIP code lottery. You could be in line for nothing depending on where you want to buy. Alternatively, you could take out a second mortgage for a few thousand dollars. Or thousands of dollars in the form of a grant that you never have to repay. As an example:
- You could get up to $55,000 in Seattle as an interest-free loan that you don't have to pay back until you move, sell, transfer, or refinance your home. And that could be decades from now.
- Alternatively, in Kauai County, Hawaii, you could save up to $80,148 throughout your loan.
Of course, some homeowners will qualify for more, while others will qualify for less. The only way to find out how much assistance you're eligible for is to look for and apply for local down payment assistance programs in your area.
Are there also grants for closing costs?
Some homebuyer programs expressly state that you can use their funds for closing costs and your down payment. Others may or may not have rules regarding this. Check with your local down payment assistance programs to see if closing cost grants are part of the package.
What mortgages are eligible for down payment assistance?
Almost all DPA programs require you to borrow from an approved lender and use a mortgage program that has been approved. You may be required to sign up for a specific mortgage product.
- DPA-approved mortgages, on the other hand, frequently include the most popular loan programs, such as FHA loans (backed by the Federal Housing Administration)
- Loans from the V.A. (backed by the Department of Veterans Affairs)
- USDA financing (backed by the U.S. Department of Agriculture)
- Many of them also allow you to borrow conventional loans (those that the government does not guarantee), such as those backed by Fannie Mae and Freddie Mac.
In other words, the mortgage products available through your DPA program may be highly flexible.
Benefits of down payment assistance
It is possible to qualify for a home loan with no money down or a low 3-3.5 percent down payment. However, there are some distinct advantages to using an assistance program to increase your down payment amount:
- You can make a more appealing offer.
- You will have a lower loan amount.
- You will have lower mortgage payments.
- You can purchase a home sooner.
In hot housing markets across the country, buyers with little or no cash for down payments find it challenging to compete with buyers who can make larger down payments.
According to the National Association of Realtors, more than half of homebuyers in April 2021 put down 20% or more. A quarter of buyers paid cash for the entire house.
If you don't have enough money for a down payment, down payment assistance loans or grants can help make up the difference.
A larger down payment can save you money over the life of your loan, in addition to helping you make a more appealing offer. More money down reduces your initial mortgage balance. Lower balances translate into more equity and lower monthly mortgage payments. Finally, and perhaps most importantly, DPA programs can assist you in purchasing a home sooner.
For example, if you set aside $200 per month to save for a $10,000 down payment, you'd have to wait more than four years. Real estate prices would almost certainly be higher by then than they are now.
You can get a foot on the homeownership ladder if you use DPA to buy sooner. You'll stop paying rent and start accumulating home equity. And this can have a significant impact on your overall financial health.
Down payment assistance programs by state
There are between 2,000 and 2,500 DPA programs in the United States, depending on whom you believe has the best addition skills. These are typically run by state and local governments, as well as community-based nonprofits.
Below is a list of some of the most critical programs in each state.
On its State Pages, the U.S. Department of Housing and Urban Development (HUD) also lists many homeownership assistance programs, including DPA.
While we have made reasonable efforts to ensure that the above information is correct at posting, it is subject to change without notice. For more information, please visit the relevant websites.
Texas Down Payment Assistance Programs
The Texas Homebuyer Program can assist with all aspects of the home-buying process, including raising funds for a down payment through a silent second mortgage.
This down payment loan does not require monthly payments, but it is not repaid. You must repay the money when you sell, refinance, or pay off your home.
To help with your down payment or closing costs, you could borrow up to 5% of your opening mortgage balance.
If you’re considering a location like San Benito or Los Fresnos, Texas, bring in Easy Solutions to help you make your dreams come true! Easy Solutions Homes is a nationally recognized and award-winning new residential construction company. Our mission is to provide families with the opportunity to realize the American Dream of owning a new home by providing education, credit, and financial products and services, as well as building beautiful quality homes. Our homes feature innovative designs, efficient open floor plans, energy-efficient features, and a three-year new home warranty, demonstrating our dedication to quality.
Please check out our page on Easy Solutions Home for more information and start the process of getting your dream home today!