Many who are thinking about buying a home are put off because of their lack of a down payment. However, it might surprise you to know that there are some down payment assistance programs available. From grants to deferred payment loans, help is out there. Don’t wait to purchase your home; check out the down payment programs that you could qualify for!
Down Payment Assistance Programs
Down payment assistance programs can be available through a local or state housing authority, a non-profit or your lender. These programs typically provide a set amount of money to qualified buyers. Buyers can use the money for a down payment or closing costs.
Money received through a down payment assistance program is usually one of the following: a grant, an interest-free loan or a debt you pay in the future. You’ll need to live in the home as your primary residence, often for a set period of time, to avoid repayment. Some down payment assistance loans require repayment when you sell, or when you have made all of your mortgage payments.
Down Payment Assistance Loan
These loans vary widely in limits, interest rates, repayment and eligibility. Down Payment Assistance loans are available from The Washington State Housing Finance Commission. Additionally, some counties, a number of cities and even some lenders have programs available. For example; The Washington State Housing Finance Commission offers The Opportunity Down Payment Assistance Loan Program. This program is in the form of a second mortgage with a 1% interest rate, and payment deferred for 30 years. Speak with your lender about all of the options in your area.
Down Payment Assistance Grant
Down payment assistance (DPA) programs can help buyers with their down payment and closing costs. Often, down payment assistance grants don’t have to be repaid. Grants are allocated by the federal government’s Department of Housing and Urban Development (HUD) to states. As a result, grant funds are then awarded at the local level to qualified buyers. Here’s a link to get you started: WA State Housing Finance Commission
Down Payment Gifts
Gift funds are any money someone gives you without conditions or requirements for repayment. This is verified through an official gift letter stating the purpose of the gift, and that there is no expectation of repayment. Gift funds are most easily received from a blood relative; however, there are other allowances. The FHA will allow gifts from your labor union, employer, charity or government organization. Caution: gift funds are carefully documented. Don’t accept and deposit funds from anyone until your lender instructs you to do so.
Bottom line: you don’t have to count yourself out of home ownership due to a lack of a down payment. Get in touch and find out what steps to take next.
Looking for more about buying a home? Check out our other blog posts for helpful information.