Downpayment Assistance Programs...
Many first-time new home buyers have difficulty coming up with the down payment necessary to purchase a new house and are not even aware that help is available in the form of down payment assistance programs. There are hundreds of ways to obtain down payment assistance money through government grants and non-profit organizations.
For most mortgage loans, a borrower is required to come up with out-of-pocket money for a down payment before qualifying. The down payment amount represents a percentage of the total price of the home - typically 20%. However, the recent trend to make home ownership available to more people has reduced the traditional 20% down payment requirement to as low a 3%.
Non-Profit Down Payment Assistance Programs...
With down payment assistance offered through non-profit charity organizations, the borrower is not required to be a first-time new home buyer and is based on factors regarding seller contributions. To obtain down payment assistance from one of these non-profit organizations, the borrower would need to have the following in place:
• Willing seller
• Experienced loan officer or broker
• Loan approval
• Participating lender
The seller agrees to make a donation to a non-profit organization in the same amount being gifted by them at closing. The amount the seller donates is deducted from the seller's proceeds. The seller is prohibited by federal housing regulations from directly giving the buyer down payment money - A third party must be involved in this type of down payment assistance. At a later date, the funds are wired to the non-profit organization as a donation. The new home buyer has nothing to do with the funds transfer and is under no obligation to repay the down payment money. Down payment assistance from non-profit programs are generally between 3 to 6% of the price of the home.
Government Grant Down Payment Assistance...
Unlike non-profit programs, government grants for first-time new home buyers don't include seller conditions or contribution requirements. To satisfy government assistance housing guidelines, the family income must meet a prescribed minimum. Income caps vary according to the number of dependants and the median income for the area where the house is to be purchased.
If a new home borrower's income is high, there needs to be more dependants in order to receive the maximum amount of down payment grant assistance available. With most government assistance grants, there's no monthly payment or interest charged to the recipient. The funds are set up as a second mortgage until the home is sold or forgiven by the government - usually 10-15 years.
Qualifying For Government Down Payment Assistance Grants...
The qualifications for down payment assistance include:
• Meet the median income set for your specific area
• Low interest loan approval
• First time home buyer (no home purchased within the last three years)
A new home buyer can be disqualified for grant money for any of the following reasons:
• Income exceeds median for the borrower chosen area
• Previous foreclosure
• Outstanding tax liens
• Delinquent child support
• Government loan default
• Home ownership within last three year
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