Housing industry studies have shown that the number one barrier to buying a home is the lack of down payment funds. Interest rates are at their lowest in years, and home prices keep rising. Down payment assistance can make a difference between buying a home how– or waiting years.
Across the nation, there are cities and counties that provide grants to first-time homebuyers to help cover the cost of their down payment. Known as “municipal grants,” funds are administered by the governmental entity to serve area residents.
Grants are like gifts, and require no repayment. Many municipal offices offer special grants to veterans, teachers, firefighters and other community-service workers. There are free grants for energy-improvements, handicap access, and health and safety improvements for homeowners.
It’s always a good idea to find out what support services are available in the community you hope to call home.
Each state has an official housing finance agency that offers low-cost mortgages and first-time homebuyer programs. Down payment assistance loans are typically 4% of the purchase price, enabling homebuyers to meet the minimum requirements for an FHA or conventional mortgage. Most agencies, however, also offer much large loan amounts to help pay for closing costs and home repairs.
Agency loans generally require no monthly payments, and are often “forgivable” over a period of time. Larger loans might be zero-percent, also requiring no payment until the home is sold or the mortgage is refinanced. State agencies also offer “mortgage credit certificates.”
Housing Finance 2020 includes a 50-state directory of grants and down payment assistance offered by governmental agencies. Community-based nonprofits and housing partnership agencies offer a wide range of programs and support services to homeowners. Even if you are not able to obtain financial assistance when buying your home, Housing Finance 2020 is a handy reference guide for homeowner resources.