Confused about where to begin your search for a down payment assistance program? This article provides the basic information you need to start off.
After the financial crisis in 2008 that left millions of Americans homeless, the government implemented laws to prevent such a disaster from happening again. The Dodd-Frank Act saw to it that home loans should abide by the Qualified Mortgage rules, instigating the slow death of easy credit and financing.
A decade after that tragic economic nightmare, lenders are realizing that there are segments of the borrower market whose needs are not met because of the stringent guidelines of the Qualified Mortgage rule.
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This is why in the past few years, one can observe that some Non Qualified mortgage programs have started re-appearing in the market, including some down payment assistance programs for cash-strapped homebuyers.
Some of these down payment assistance programs aren’t actually new. A few of them were survivors of the 2008 credit meltdown and continued to offer their programs amidst the tight market prohibitions.
These programs have diversified to cater to a variety of consumer needs. In fact, there are programs out there that still approve loans for borrowers who earn more than their area’s median income.
So whether you are low on savings or don’t have those savings in the first place, these programs might just be the key to your dreams of homeownership.
Types of down payment assistance programs
Every US state has housing and down payment assistance programs to help their citizens. But while down payment assistance comes in many forms, the most common include the following. If you don’t know where to begin your search, these options may be great starting points.
- Fannie Mae – Fannie Mae’s low down payment mortgage, rolled through the HomeReady® program provides assistance to low-to-moderate income as well as first-time or repeat homebuyers
- FHA mortgage – provides low-interest mortgage with only 3.5 percent down payment requirement for borrowers who meet their credit score requirements
- Freddie Mac – this government service agency partners with Housing Finance Agencies and Down Payment Resource to help people get into homes. They also provide readily accessible information on common sources of down payment and closing cost assistance
- Community grants, state and local housing agencies
- Lender Specific Community Reinvestment Act programs
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What are the qualification requirements for down payment assistance programs?
Just like the information above, this list includes the most common qualification standards. Some of these limitations may not apply to some programs.
- The buyer must use the property as his or her primary residence.
- The homebuyer must obtain homebuyer education or counseling through a certified counseling organization
- The buyer’s income must meet or be within the program’s limits.
- The price of the home to be purchased must be within the program’s limits.
Down payment assistance resource
The best place to start with your search is local. Head over to your state’s housing agency to inquire about available down payment assistance programs and their eligibility requirements.
The HUD or the US Department of Housing and Urban Development may also have quality information regarding these programs.
Or, you can simply use our easy Down Payment Search portal to find information on programs in your state and even get connected with a lender right away.