What is Down Payment Assistance? How do I qualify?
Down payment assistance (DPA) programs offer loans, grants or monies to cover part or all of a home buyer’s down payment and closing costs. This article will provide more information and details on who the program works.
One of the biggest hurdles for a first-time homebuyer is to save enough money for a purchase of a home. Fortunately, the days of needing to put down 20% are long gone with many programs requiring a 3% range down payment. Even a smaller down payment requirement can be a challenge. Many states, local government agencies along with charities offer loans or grants to help with the down payment. Government agencies such as Fannie Mae and Freddie Mac offer grants up to $2500 to assist the home buyer. Most of these programs have certain income requirements to qualify.
Most these programs are either a grant (does not need to be paid back) or a forgivable loan (usually at zero interest) and can be erased if you live in the home for a certain amount of time.
To qualify you may have to be a first-time homebuyer (typical), meet certain minimum credit requirements (credit score of 620 and above) as well as not make too much money. AMI or Area Median Income limits are set by HUD for a metropolitan as guidance.
It is always good to consult with your trusted mortgage lender such as Hall Financial to review what option is best for you.