The upfront costs of buying a home can feel overwhelming, thanks in part to that big first-time buyer down payment you have to come up with. But not to worry, there are programs out there that offer down payment assistance. Here’s what you need to know about those programs and some of the things you’ll need to qualify.

Household income thresholds

One of the first things you’ll want to investigate with any first-time home buyer down payment assistance program is the income limit they may have. Depending on the program you’re applying for, you may qualify if your income is at or below 80% of the median income for your area. In other states, you may be able to bring home 20% above the median income and still be approved.

Knowing the limits for your area can help you determine right away if down payment assistance may be a good option for you.

Homeownership education

One cool thing about some of these programs is that you’ll actually receive education through the application process. For these programs, a first-time homebuyer may be required to complete that programs educational courses. They’re typically online and offer valuable information about the home buying process. Why would this be a requirement? It’s just another way that those investing in your future as a homeowner (by giving you money) ensure that you’ll have the best chance to succeed! Once you know which program you may be working towards, start taking the steps to meet their requirements. Things may get busy the closer you get to buying your first home so check any course off the list early!

Active military and/or veterans

If you’ve chosen to serve your country, you’ll be glad to hear there are some programs to make your first-time home purchase easier. If you’re purchasing your home already with a VA loan, you may not have to worry about a down payment at all. In addition to that, programs for Military and/or Veterans can often offer assistance towards other down payment costs.

If you weren’t in the military but have another public service type job, such as a firefighter or teacher, keep an eye out for programs that may offer support based exclusively on your career field. Typically, these programs exist for those in education or first-responder roles.

Credit score

If you’ve read any of our other education on home buying, chances are you saw this one coming. Your credit score determines a host of factors when buying a home, from your interest rate to mortgage options and more. Your credit score may also determine your eligibility for down payment assistance programs. We always encourage anyone who plans to buy a home in the future to be working on improving their credit score. It’s a simple way to take a step in the right direction, whether you plan to buy tomorrow or in a few years.

Money Money Money

You guessed it, sometimes your cash position – or how much money you have in the bank – will play a role in getting approved for payment assistance programs. This comes into play if a certain program has a cash reserve requirement. Like with buyer education, these programs are designed to help you succeed in home ownership. Having appropriate savings for emergencies is important when buying a home, which is why this requirement may show up. Start saving early, whether it’s through your own program or the one we offer here at Digs.

Types of Down Payment Assistance Programs

Let’s take a look at what types of programs are out there, and how to find them. It’s important to know that you’re not just limited to Federal assistance programs. In fact, many States and Cities offer help, depending on where you are looking to buy. Always start with local professionals who know your area best. Building a team of experts for your first home purchase will help make your life easier – look for a quality real estate agent, mortgage banker or broker and a title company. Often times, once you find a great realtor, they’ll have connections to the rest of the people you’ll be working with.

FHA down payment assistance programs

It also may come as a surprise that the type of home you’re buying matters when we’re talking about down payment assistance. For example, FHA (Federal House Administration) is often thought of for getting a loan. But the FHA is actually a part of the Department of Housing and Urban Development (HUD) and has opportunities for assistance on certain types of homes, like foreclosures.

HOPE down payment assistance programs

HOPE, when talking about the HUD assistance program, stands for Homeownership and Opportunity for People Everywhere. This program offers grants for low-income individuals or families who want to become homeowners. New homeowners are eligible to purchase public housing units so this program may not make the most sense for you if you already have a specific neighborhood or community in mind.

More programs by state

These examples represent some of the larger names you’ll find when researching down payment assistance programs and you’ll have no trouble finding a lot of resources to explain HUD and FHA options. They’re a great start – but don’t stop there. Visit the link below to help you find more information by state and remember to utilize your team of experts. Their job depends on staying current with the information in their industry and it may be more useful than anything you can get from well-intentioned family or friends.

See a full list of programs by state here >

A note about lenders

It should come as no surprise that lenders are also interested in getting you into your new home. Of course, the sooner they can help with that, the sooner you can start making payments to them! This assistance often comes in the form of a second loan. The way it works is that the lender will provide the first loan without interest, and the second loan to pay for the interest – either at the time you sell or refinance your house. This may sound a little confusing, but it’s essentially a way the lender can get paid later, resulting in a lower monthly payment initially for you. Not all lenders participate in these types of programs because they make more money with the traditional method – but it’s another avenue to look into when doing your research.

It’s never to early to get started!

The last thing to remember is that getting started early matters. Whether you’re hoping to qualify for a program or it’s too early to tell, when it comes to buying your first home, the sooner you start saving money and making steps to repair your credit, the better. Make it easy by using our program here at Digs. We’ll take the stress out of setting aside money every month and assist you from day one to getting your first set of keys!

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