Today, in this writing piece, Isatou Ceesay real estate agent is going to debunk five common down payment myths that may be keeping home buyers on the sidelines. Continue reading to learn more!
Myth #1: You need 20% down payment to buy a home.
TransUnion’s survey found that 41% believe a high down payment is required to purchase a home. New data shows that a lower down payment may even be better for many new buyers, as it provides a valuable cash cushion. Researchers found that having at least three months of mortgage payments available is a great measure of homeownership success than a large down payment. Also, there are many homeownership programs that can help you with the down payment and closing costs.
Myth #2: Down payment help is only for first-time homebuyers.
The industry often associates homeownership programs with first-time homebuyers, but eligibility is actually broader. The actual definition of a first-time homebuyer is someone who has not owned a home in the time of three years. In addition, the HPI reports states that around 41% of homeownership programs do not have a first-time homebuyer need and are available for eligible repeat homebuyers.
Myth #3: Down payment programs aren’t available around my location
Down payment programs are available in every market across the country. The HPI reports 70% of programs are available in a specific local area, such as a city, county or neighborhood and nearly 30% of programs are available state-wide through state housing finance agencies — a 2% increase from the previous HPI. States with the greatest number of down payment programs remained consistent —California, Florida and Texas are the top three.
You can view a complete list of state-by-state program data here.
Myth #4: It’s too expensive to buy a home in my market.
Down payment is always available in all markets, including high cost areas too. The HPI reports that 11% of programs offer incentives and even specific programs for community service workers, including educators, police officers, firefighters and healthcare workers — a 3% increase from the previous HPI.
Plus, more than 6% of programs have benefits for veterans, members of the military and surviving spouses. These programs can also be layered with zero down payment VA loans.
One-to-four unit multi-family properties can also qualify for down payment help. 25% percent of programs allow home buyers purchase a multi-family property as long as the buyer occupies one of the units. As a result, this allows the homeowner to earn income from their rental units and pay the mortgage.
Myth #5: Down payment programs make home financing more difficult
There are 2,451 homeownership programs available and 83% currently have funds available to eligible homebuyers. Discovering home financing options should be the initial step for prospective buyers. However, they don’t have to do it alone. Housing agencies, program administrators, and participating lenders can help you and provide expert guidance.
Homebuyers can get a jump start by completing the homeownership education course typically required to qualify for a program. This education gives home buyers great confidence with the home buying process, financing options, and budgeting. Homebuyers should refer to the specific requirements and education providers as specified by the program.
After a homebuyer is approved for a program, the agency will provide documentation that can be submitted with an offer. Sellers can also benefit because the down payment program may help cover closing costs. Searching for a certified residential broker Lynnwood in WA? Get in touch with Isatou Ceesay real estate agent – the top real estate agent in WA!