A down payment refers to a sum of funds that a homebuyer needs to pay in the first stages of buying a home. It is not a part of the overall mortgage and home buyers provide it upfront. It represents the amount of equity you will have in your new house. However, it can be hard for homebuyers to provide this amount upfront because it is typically based on the percentage of the home. For example, an FHA loan requires a 3.5% down payment. That means if the home you are trying to purchase is $300,000 then you will need to provide $10,500. That is why there are down payment assistance options.
How Does Down Payment Assistance Operate?
Down payment assistance options are presented in several types, such as grants, loans, or other programs. There are many different organizations that provide this form of assistance. The available assistance can be backed on a local, state, or federal level. Depending on the program you apply for, you will find specific eligibility requirements. Some assistance options might need for you to meet additional requirements. This could include mortgage training or finance maintenance.
Additionally, the way you get the down payment assistance differs from one program to another. There are some programs that provide assistance based on a percentage of the home’s purchase price. On the other hand, there are assistance programs that offer financial relief to a particular amount. When you are looking through different down payment options, you should carefully look through the requirements of your eligibility.
You will find that there are some experts that could provide support and information on down payment assistance. If you think you need more information, then you can reach out to your local public housing authority (PHA) or with a housing counselor that the HUD sponsors.
What are Some Different Forms of Down Payment Assistance?
You can expect some common types of down payment assistance to include:
- Grants
- Chenoa Fund
- Matched Savings Programs
Grants
Homebuyers find grants as the best types of down payment assistance, because you do not need to repay the money. You heard it right! There are grants that offer money to homebuyers that you can consider free money! Grants are typically offered from non-profit organizations.
Chenoa Fund
This is a program that provides down payment assistance across the country (except for New York). Individuals that want to benefit from this opportunity need to meet minimum requirements in order to qualify. It is made available through the CBC Mortgage Agency (CBCMA). The CBCMA is a federally chartered government entity. It can provide up to 3.5% of the homebuyer’s property price. When recipients get this down payment assistance it will come in the form of second mortgage loan products that are either forgivable or repayable.
Matched Savings Programs
You can refer to these programs as Individual Development Accounts. This is another form for homeowners to manage their down payment costs. With these programs, homebuyers will deposit money into a bank account, government agency account, or community organization account. Then, the institution matches the amount that you deposit and the money can go towards the down payment. For instance, if a homebuyer deposits $3,000, then the financial institution will match the funds. This means that the homebuyer will have a total amount of $6,000 to use.
Conclusion
In conclusion, there are ways for you to find support for down payment. There are three forms of down payment assistance, which are as follows:
- Grants
- Chenoa Fund
- Matched Savings Programs
But, you need to make sure that you meet all of the eligibility requirements to qualify for down payment support. You may find that there is a helping hand when it comes to buying a house that you didn’t know existed!
