With a down payment program, you can easily boost the process of becoming a homeowner. By having the right knowledge of your down payment options, you can become a homeowner quickly. To help you understand down payment better, here are a few important things.
Can a Down Payment Program help you Move up to Your Next Home Fast?
Yes, it can! Some homeownership program indexes found an increase in the share of programs without a first-time homebuyer requirement. What does it mean? Well, it means more homeownership programs can be used to serve repeat and move-up homebuyers. Keep in mind that a first-time buyer is someone who hasn’t owned a home in the past three years. Also, if you’ve owned a home before, but have been renting the past three years, you’re again a first-time homebuyer.
Is it Right to Use an FHA (Federal Housing Administration) Loan with Down Payment Assistance?
The honest answer is no. Depending on your situation, there’re different kinds of mortgages available. Each down payment assistance program contains a list of “eligible first mortgages” that can be used with the program. Your first mortgage is your primary home loan and your down payment assistance comes in different forms. Most down payment programs accept first mortgages that include conventional, FHA, USDA, and VA loans.
Different Loan Types
FHA loans are popular for first-time homebuyers because of their low 3.5% down payment and flexible credit requirements. On top of that, it’s important to understand that conventional loans accept just a 3% down payment and could be paired with down payment assistance programs. Another FHA loan alternative is HFA Advantage or HFA Preferred conventional loans that provide the lowest mortgage insurance rates for HFA loans with or without down payment assistance programs. Above all, do compare different mortgage loans to see what suits your situation best.
Lately, HUD issued new guidelines for down payment assistance on mortgages. Want to know what’s new?
The new guidelines clarify an existing rule and require federal, state, or local government HFAs to supply a modified obligation letter along with documentation. This documentation means that HFAs are authorized to provide down payment assistance in their jurisdiction. This also means that lenders need to supply that documentation at the loan level.
What’s the influence on homebuyers?
Here are three things to understand:
- These rules don’t impact conventional lending, including HFA Advantage and HFA Preferred. They only impact FHA loans.
- FHA is still allowing for down payment assistance, but with clarification of the assistance.
We buy houses in Washington and we are committed to providing the most accurate and fresh information on affordable lending programs across the country. We closely track changes and updates as necessary, such as any change to eligible first mortgage types for each down payment assistance program.
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