Downpayment Assistance for Buyers

Understanding Downpayment Assistance

For many prospective homeowners, the biggest hurdle to home ownership is the downpayment. However, there are numerous downpayment assistance programs available that can help buyers overcome this challenge. These programs provide loans or grants to cover the costs of downpayments and closing costs.

Types of Downpayment Assistance Programs

Downpayment assistance programs come in several forms. Grants are funds that you do not have to repay. Second mortgage loans are usually low-interest or interest-free loans that you repay when you sell your home, refinance, or pay off your first mortgage. Forgivable second mortgage loans are loans that you do not have to repay if you live in your home for a certain period.

Eligibility for Downpayment Assistance

Eligibility for downpayment assistance programs typically depends on income and the price of the home you plan to purchase. Some programs are targeted at first-time homebuyers, while others are available to repeat buyers. Many programs also have homebuyer education requirements.

Income Limits

Most downpayment assistance programs have income limits. These limits are usually set as a percentage of the Area Median Income (AMI). For example, you might be eligible if your income is 80% or less of the AMI.

Home Price Limits

Many programs also have limits on the price of the home you can purchase. These limits are intended to ensure that the programs help people buy modestly priced homes.

How to Find Downpayment Assistance Programs

There are many places to look for downpayment assistance programs. Your state or local housing finance agency is a good place to start. You can also check with your city or county housing department, or a non-profit housing organization. Many lenders and real estate agents are also familiar with these programs.

Getting Help

Applying for downpayment assistance can be complicated. It's a good idea to get help from a housing counselor. Counselors can help you understand your options, find programs that are a good fit for you, and navigate the application process.