The Down Payment Assistance You Didn’t Know About

 

The Down Payment Assistance You Didn’t Know About

Believe it or not, almost 80% of first-time homebuyers qualify for down payment assistance, but only 13% actually use it. And if you’re hoping to buy a home, this is a mission-critical gap to close – fast (see graph below):

Here’s what you need to know to make the most of your down payment in today’s housing market.

Amplify Your Down Payment Potential

For first-time buyers, the name of the game with down payments is making sure you’re taking advantage of all the resources out there designed to help you. And a bunch of them can get you to your goal faster than you may have thought possible.

For example, there are loan options that require as little as 3% down, or even 0% for certain qualified borrowers, like Veterans. And let’s not forget down payment assistance, like grants and other opportunities, that help you cover the upfront cost of your down payment.

If you’re interested in exploring those options and what you may be able to use to your advantage, connect with a trusted lender. Because if you don't at least see what’s available, you could be leaving money on the table and missing your chance at buying a home. These resources can boost your down payment. And a higher down payment could help lower your eventual monthly mortgage payment, and even avoid or reduce your fees like private mortgage insurance.

Don’t Let News Headlines About Down Payments Scare You

There’s one more thing to address. News coverage has been talking about how the typical down payment is rising. A report from Redfin states:

“The typical down payment for U.S. homebuyers hit a record high of $67,500 in June, up 14.8% from $58,788 a year earlier . . . This was the 12th consecutive month the median down payment rose year over year.”

But don’t let those high dollars scare you. Just because the average down payment is rising doesn’t mean down payment requirements are going up. That’s a key piece of the puzzle to understand. It’s really just because people are choosing to put more down to try to offset higher mortgage rates, and current homeowners who are putting their equity to work are using that to increase their down payment on their next home. As HousingWire explains:

“. . . buyers are putting down a higher percentage of the purchase price to lower their monthly mortgage payment. And buyers also had more equity from their home sales, which gives them more cushion.”

Let’s break those two reasons down a bit:

1. A bigger down payment helps lower your monthly mortgage payment. Affordability has been a challenge for many buyers recently, which is why those who have the ability to make a bigger down payment are going to do so in an effort to lower their future housing costs.

2. Buyers who already own a home have a record amount of equity to leverage. Someone who bought a home a few years ago has gained a significant amount of value in their house, thanks to home price appreciation. These people can put down much more than the average first-time buyer who hasn’t owned a home yet.

Bottom Line

What’s the best thing to do? Talk with a trusted lender about your options. They’ll help you figure out where you stand today and how to access the resources you may qualify for. Because help is out there, you just need to work with a pro to take advantage of it.

Important Information Regarding Down Payment Programs Today

 

What You Need To Know About Today’s Down Payment Programs

There's no denying it's gotten more challenging to buy a home, especially with today's mortgage rates and home price appreciation. And that may be one of the big reasons you’re eager to look into grants and assistance programs to see if there’s anything you qualify for that can help. But unfortunately, many homebuyers feel like they don’t know where to start. 

A recent Bank of America Institute study asked prospective buyers where they lack confidence in the process and need more information. And this is what topped the list:

53% said they need help understanding homebuying grant programs.

So, here’s some information that can help you close that gap.

What Is Down Payment Assistance?

As the Mortgage Reports explains:

“Down payment assistance (DPA) programs offer loans and grants that can cover part or all of a home buyer’s down payment and closing costs. More than 2,000 of these programs are available nationwide. . . DPA programs vary by location, but many home buyers could be in line for thousands of dollars in down payment assistance if they qualify.”

And here’s some more good news. On top of all of these programs, you probably don’t need to save as much for your down payment as you think. Contrary to what you may have heard, typically you don’t have to put 20% down unless it’s specified by your loan type or lender. So, you likely don’t need to save as much upfront, and there are programs designed to make your down payment more achievable. Sounds like a win-win.

First-Time and Repeat Buyers Are Often Eligible

It’s also worth mentioning, that it’s not just first-time homebuyers that are eligible for many of these programs. That means whether you’re looking to buy your first house or your fifth, there could be an option for you. As Down Payment Resource notes:

“You don’t have to be a first-time buyer. Over 39% of all [homeownership] programs are for repeat homebuyers who have owned a home in the last 3 years.”

Additional Down Payment Resources That Can Help

Here are a few of the down payment assistance programs that are helping many buyers achieve their dream of homeownership, even now:

• Teacher Next Door is designed to help teachers, first responders, health providers, government employees, active-duty military personnel, and Veterans reach their down payment goals.
• Fannie Mae provides down payment assistance to eligible first-time homebuyers living in majority-Latino communities.
• Freddie Mac also has options designed specifically for homebuyers with modest credit scores and limited funds for a down payment.
• The 3By30 program lays out actionable strategies to add 3 million new Black homeowners by 2030. These programs offer valuable resources for potential buyers, making it easier to secure down payments and realize their dream of homeownership.
• For Native Americans, Down Payment Resource highlights 42 U.S. homebuyer assistance programs across 14 states that ease the path to homeownership by providing support with down payments and other associated costs.

If you want more information on any of these, the best place to start is by contacting a trusted real estate professional.

They’ll be able to share more details about what may be available, including any other programs designed to serve specific professions or communities. And even if you don’t qualify for these types of programs, they can help see if there are any other federal, state, and local options available you should look into. 

Bottom Line

Affordability is still a challenge, so if you’re looking to buy, you’re going to want to make sure you’re taking advantage of any and all resources available.

The best way to find out what’s out there is to connect with a team of real estate professionals, including a trusted lender and a local agent.