Down Payment Assistance (DPA) programs are becoming more popular by the day. Government-run programs, plus approved non-profits, offer gifts and no-interest loans to support homeownership in select communities. Nearly 90% of all single-family homes in the U.S. are eligible for some kind of DPA according to a study by RealtyTrac. All the major loan types mentioned above allow the borrower to apply DPA funds toward the required down payment, if any, and in some cases, closing costs.
Down payment grants are designed to help eligible buyers bridge the gap between their savings and the required down payment for a mortgage, this money doesn’t usually have to be repaid. Some programs require the borrower to stay in the home for a set period of time. If they move or sell before the set period, the gift may have to be repaid in full or partially.
How to qualify:
Although every grant and assistance program varies, here are some general qualifications that you may be expected to meet…
- You must be a first-time buyer purchasing a primary residence.
- Income limits apply. (Typically, buyer income can’t exceed 80 percent of the Area Median Income.)
- There is usually a maximum home sales price, which depends on local housing costs.
- You will likely have to attend a homebuyer counseling program. These courses help educate future homeowners about managing their financial responsibilities.
- Most times, the home must be located within certain geographic boundaries.