Down Payment Assistance Programs for First-Time Homebuyers
Buying
For first-time homebuyers, scraping together a down payment can be difficult. Luckily, there are dozens of down payment assistance programs that help first-time homebuyers afford the house of their dreams.
What is Down Payment Assistance?
Down payment assistance offers exactly the benefit it advertises: help with the down payment on a home.
Since many adults don’t have the savings needed to facilitate a 20% down payment on a home, down payment assistance is designed to either lower the minimum down payment or offer financial aid in the form of grants or discounts to people looking to purchase their first homes.
Which Programs Offer Down Payment Assistance?
The Federal Housing Administration (FHA)
One of the most commonly known down payment assistance programs, the Federal Housing Administration’s (FHA) down payment assistance program is designed to help facilitate home purchasing for people with less-than-perfect credit.
When a buyer applies for a loan that is backed by the FHA, the minimum required down payment is often as small as 3.5%.
The U.S. Department of Veteran’s Affairs (VA)
The U.S. Department of Veteran’s Affairs offers a down payment assistance program designed to help retired and active service people, and their families purchase homes.
With the support of this program, buyers are typically able to buy a home with no down payment and without purchasing mortgage insurance. The only downside of this program is that the approval process can be expensive and time-consuming.
The U.S. Department of Agriculture (USDA)
While few people know it, the USDA offers a down payment assistance program for homebuyers.
This program is designed to help people in rural areas purchase homes. To facilitate these purchases, the USDA offers 100% financing and guarantees mortgages for lenders. Keep in mind that this program does feature limitations on income, and the rules and regulations vary according to region.
Fannie Mae and Freddie Mac
The big names in the home loan industry, Fannie Mae and Freddie Mac offer down payment assistance programs in cooperation with local lenders.
In some cases, these assistance programs can produce down payments as low as 3% for some buyers, so be sure to look into these programs before you commit to working with any one organization.
Shop Smarter
While there are dozens of options for assistance programs, shopping smart is critical. Because down payment assistance programs are so varied, not every choice is right for every homeowner, and you’ll likely find that you can locate a better fit if you just keep looking instead of jumping on the first deal you see.
These assistance programs are a valuable tool for first-time homebuyers, and can help facilitate the purchase of a home without the standard 20% down payment. This, in turn, makes the dream of home ownership a reality for millions of Americans in varying financial circumstances.
