Down payment comes as a challenge for many homebuyers; saving up 20 percent of the cost and making the payment towards the house is not an easy task. The worst thing is, that you cannot take a loan to pay the down payment, or else you will face problems in getting your loan sanctioned.
If you are somebody who plans to buy a home but are facing difficulties in saving up for that down payment, you need not lose all your hopes as there is a solution: Down payment assistance program.
What are down payment assistance programs work?
The down payment assistance programs are run to help homebuyers with the down payment. They can either be administered by non-profit organizations, the housing authority, or your lender. Under the program, the eligible buyers are given a set amount of money that can be used buy them to either pay the down payment or the closing costs. The terms and conditions of the program differ from state to state.
The programme requires you to agree to live and use the address as your principal residence for a given time period; if you are able to fulfil this requirement, you will be able to avoid paying the money back.
The eligibility for the qualifying for the programme depends on two things: You and the house that you want to buy.
For the homebuyer, his or her income will be assessed and the eligibility depends on certain things like the area median income, cash reserve requirements, and the credit score. It has been observed over the year that the chances of the first time buyers are much more than others, so, that can also be a factor. It also has been noticed in the trends that the chances of community heroes like the people in the military are better at qualifying for the assistance. They will want you to attend training programme for homeownership.
For the home in question, the main criteria for eligibility is the sales price of the home. The program caps the sales price, considering many different factors like area median home price. Another requirement is that the homeowner has to agree to use it as his or her primary residence.
If you wish to know more about it, this blog article about downpayment assistance at OnQFinancial will help you enhance your knowledge.