Down Payment Assistance Options for First-Time Homebuyers

One of the biggest hurdles for many first-time homebuyers is getting that down payment together. We understand, especially if you’re trying to scrape together 20% of a home’s purchase price (insert large gulp here).

There are two things many first-time homebuyers don’t realize, though:

• You generally don’t have to put a full 20% down on a home.

• Tons of down payment assistance programs are ready, willing, and able to help you out.

What Is Down Payment Assistance (DPA)?

Down payment assistance is a helping hand in the form of grants, loans, or gifted funds that can give you a boost in covering the initial down payment requirements that come with buying a home.

There are various programs, often funded by government agencies or nonprofit organizations, designed to support buyers in becoming proud homeowners. These programs can provide you with the funds for your down payment requirements, and some programs will also cover closing costs.

One of the great things about down payment assistance is that it’s not a one-size-fits-all deal. Different programs have different eligibility criteria, so you can find one that suits your situation.

Some programs are based on your income, others on the location of your dream home, and some are tailored for certain professions. It’s like having a menu of options to choose from.

Popular Down Payment Assistance Programs

Do you know who else is ready, willing, and able to help with down payment assistance programs?

Let’s deliver that help ASAP by outlining some of the most popular down payment assistance programs. Many loan programs are offered at the state and local government level, as well as the national level. This can give first-time homebuyers the boost they need when buying a home.

Pathways DPA

Paired with our 30-year fixed FHA loan, buyers can use APM’s Pathway DPA program to lighten the upfront costs. Our in-house program helps buyers purchase a home by offering 3.5% or 5% assistance. This comes as a 10-year fixed-rate second mortgage—just 2 percentage points higher than your first mortgage rate and carrying lower costs than traditional DPA programs.

Chenoa

The Chenoa Fund offers down payment assistance to low- and moderate-income homebuyers. Through Chenoa, eligible buyers can receive forgivable loans that cover a portion of their down payment and closing costs. These loans don’t accrue interest and are fully forgiven after some time, typically three to five years.

Within Reach for FHA loans

Another down payment assistance option for first-time homebuyers is the Within Reach program. This provides low-interest loans to help with the down payment and closing costs. By offering down payment assistance at a lower interest rate, Within Reach helps first-time homebuyers save money on their monthly payments over the term of the loan.

Lakeview National

Lakeview National is another loan program that offers assistance with down payment. And even better, this program is nationwide!

Eligible first-time homebuyers can receive grants or loans as a form of down payment assistance and closing cost assistance. These funds can help first-time homebuyers bridge the gap between their savings and the amount they need when buying a home.

1% Home

APM’s 1% Home program makes the math easy. It offers down payment assistance of up to 2% of the home’s purchase price (up to $4,500). This program is especially helpful for first-time homebuyers, as you can combine it with many other down payment assistance programs. Loan limits apply on this program, so consult your APM Loan Advisor.

Fannie Mae HomeReady

Fannie Mae has a great down payment assistance program offering up to $2,500, which you can combine with its HomeReady program. It’s helpful for first-time homebuyers with limited household income or credit history. This program allows eligible buyers to qualify for low down payment mortgage loans with flexible underwriting criteria.

The program also offers down payment assistance in the form of grants or deferred payment loans.

Freddie Mac Home Possible

Like Fannie Mae, Freddie Mac offers $2,500 in down payment assistance when coupled with its Home Possible loan program. It offers down payment assistance through low down payment mortgage loans for first-time homebuyers. If you qualify as a first-time homebuyer, you can obtain mortgage loans with as little as 3% down.

The Importance of Consulting a Mortgage Lender

All these down payment assistance programs are crazy exciting—especially for first-time homebuyers—we know! But here’s where we have to slow our roll a little.

While it’s always good to educate yourself on the various types of home loans and down payment assistance programs offered, you need to consult with a licensed loan officer before you go too far down the road and start celebrating.

That’s because eligibility requirements like minimum credit scores can vary by program and location. This can be true whether the assistance is offered through your local government or through major national programs.

You want to make sure you and your mortgage lender pick the right down payment assistance programs for you.

To see a full webinar on these programs and learn more, CLICK HERE