Saving up for a down payment is one of the first pieces of advice that buyers get when they first start looking for a home. The traditional 20% down standard can cause some buyers to balk and be a challenge to save up for but luckily in many situations, it isn’t required.
This is where down payment assistance comes into play.
Down Payment Assistance Comes In Many Forms
Down payment assistance programs are programs designed to help buyers who may not have cash on hand buy a home. These programs can be locally or federally funded and managed by state or municipal organizations. This is a great way for first-time buyers to save on a down payment and get the home they want without dipping too much into their savings.
This assistance can come in several forms, including:
- Grants: Considered a gift, grants do not have to be paid back.
- Zero-interest, forgivable loans: A second mortgage starting at 0% interest that participating lenders will forgive after a specific period of time.
- Zero-interest, deferred-payment loans: A second mortgage starting at 0% interest that you don’t have to repay until you move, sell, or refinance the first loan.
Repeat Buyers Can Be Eligible For Down Payment Assistance
To be eligible for a down payment assistance program, requirements can vary from program to program. The most common requirements include the buyer:
- Taking a homebuyer education course
- Meeting income limits
- Not having owned a home before or in the last three years
- Must be in a specific geographic area
- Must use the home for their primary residence
While most programs are geared towards first-time homebuyers, those who have owned a home before can be eligible in some programs.
Talk To Your Agent And Lender About Your Options
Saving up for a down payment doesn’t have to be stressful. To find the best down payment assistance program for your needs, your agent at Merchant of Homes will be able to help guide you to local lenders who specialize in the area. These lenders will show you where to start and guide you through eligibility requirements.