If you are planning to become a homeowner, but don’t have enough money for a down payment, don’t worry! With a state or local down payment assistance program, you can succeed. Most states and cities offer grants and no-interest loans to first-time homebuyers and help them pay for down payments and closing costs.
How down payment assistance programs work according to a Lynnwood WA Realtor?
Generally speaking, the assistance comes through state housing finance agencies or state and county government programs. Their programs are aimed at meeting affordable housing needs and are often offered in combination with mortgages geared to first-time buyers. The kind of closing cost and down payment assistance differs with the program.
Some of the most common forms of assistance are:
- Grants – These are those programs that provide an outright gift of cash.
- Zero-interest or forgivable loans – These are those loans that are forgiven over a certain period, such as 5 years. In this case, the money doesn’t need to be repaid as long as the borrower still owns or lives in the house after the period has ended.
- Zero-interest or deferred-payment loans – In this particular assistance, terms and conditions vary. Normally, no payments on the down-payment and closing-costs loan are due until the house is finally sold and the mortgage is refinanced or reaches the end of the term.
- Low-interest loans – These loans must be repaid over a certain period of time, such as 10 years. This consequently makes homeownership more achievable by spreading the down payment and closing costs over multiple years.
Who is eligible for down payment assistance?
Most down payment assistance programs are available for first-time buyers, but no need to count yourself out if you’ve ever owned a house in the past. These programs generally define a first-time buyer as someone who hasn’t owned a home in the past three years. Also, some local programs focus on certain groups, such as teachers, police officers, and city employees. Whereas, others are available for any qualified repeat homebuyer.
While the requirements for each down payment program vary, but besides being a first-time buyer, you typically should:
- First, take a proper homebuyer education course.
- Meet desired or needed income limits. For instance, there are many programs that are geared to low and moderate-income residents. Therefore, a borrower’s household income should be below a certain threshold.
- Remain below the maximum home purchase rate, which is mostly a percentage of an area’s median home purchase rate.
- Contribute some money toward the purchase.
How to apply for mortgage down payment assistance?
If you want to apply for mortgage down payment assistance, you can directly talk to Isatou Ceesay, a certified Lynnwood WA Realtor. Here is what she suggests:
- Explore down payment assistance programs provided by your state’s housing finance agency, such as the Isatou Ceesay Realtor.
- See all the first-time homebuyer programs to find out the suitable programs for your location.
- Check with your city and state to know if agencies offer any local grant programs for first-time buyers.
- Visit the official website of the local government agency that is administering the program and learn about down payment assistance requirements.
- Now apply for a mortgage with an approved lender that is working with the grant program.
For more information regarding down payment assistance, feel free to talk to the Isatou Ceesay Realtor today!