Down Payment Assistance
Saving for a down payment is the number one hurdle that keeps potential homebuyers from pursuing homeownership. Many qualified homebuyers are not aware of the various homeownership programs available to them. Down payment assistance programs are designed to help homebuyers with the upfront costs associated with purchasing a home, particularly the down payment.
WHAT IS A DOWN PAYMENT?
A down payment for a home is a portion of the home's overall purchase price that the home buyer pays in advance. The remaining balance is typically financed with a mortgage lender. The down payment is due during the closing of the home sale.
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WHAT IS THE PURPOSE OF A DOWN PAYMENT
A down payment plays an important role when it comes to the purchase of a home. The down payment shows the lender that the borrower is committed to the home purchase and has the financial ability to make an investment in the property. The down payment also reduces the amount of money that the borrower needs to borrow from the lender, which can help lower the monthly mortgage payments and overall cost of the loan. The buyer can often obtain a lower interest rate by paying a larger down payment.
HOW MUCH DOWN PAYMENT IS REQUIRED
The amount of down payment a buyer is required to pay will depend on the type of loan they secure as each loan has its own set of requirements. For example, FHA loans require a 3.5% minimum down payment and conventional loans require a 3% minimum down payment. While a 20% down payment has been the standard for some time, a 20% down payment is not necessary to buy a home. Lenders will require buyers who pay less than 20% in down payment to pay private mortgage insurance. Private mortgage insurance costs are lower with a conventional loan when compared with other types of loans, and buyers can get rid of private mortgage insurance once they have accrued over 20% equity in their home.
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WHAT IS DOWN PAYMENT ASSISTANCE
Down payment assistance (DPA) is a home-buying program that gives cash grants, low-rate loans, and tax incentives to eligible buyers. The purpose of down payment assistance is to make homes more affordable, and homeownership more attainable for home buyers.
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WHAT ARE THE REQUIREMENTS FOR DOWN PAYMENT ASSISTANCE?
The requirements for down payment assistance will vary from program to program. For example, many down payment assistance programs are designed for first-time home buyers. First-time homebuyers are defined as someone who has not owned a home in three years. If you are not a first time homebuyer, you may still qualify for certain down payment assistant programs. About 37% of Down payment assistance programs don't require you to be a first time homebuyer. Most programs will require the buyer to complete a homebuyers education program.
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ARE THERE PROGRAMS AVAILABLE IN MY AREA?
Down payment assistance programs are available in every community across the country. You can see if you qualify for down payment assistance by following the link below.
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