3 types of down payment assistance to boost your purchasing power
Are your savings holding you back from buying a home? While pulling together a large enough down payment to reach 20% of your purchase price eliminates pesky mortgage insurance, 80% of first-time homebuyers are coughing up less at the closing table.*
If you’re like most buyers, down payment assistance (DPA) could get you a lower interest rate and help you hit 20% sooner. As of July 2019, there are about 2,500 DPA programs nationwide.** These chiefly consist of grants, second mortgage loans and tax credits.
Grants
Money you don’t need to pay back—provided you own and occupy your home for a certain time period. Grants typically fund a specific amount or a percentage of your down payment or closing cost assistance. Guaranteed Rate’s Give 2 You program is a prime example.
Loans
Second mortgages with low or no interest rates are another popular option. These loans are offered by city and state government and can often be deferred—or completely forgiven—over time.
Tax credits
A mortgage credit certificate reduces the amount of federal taxes homebuyers are required to pay. From local government programs to state housing agencies, these credits are issued to free up more money upfront for your down payment or closing costs.
No matter your location or financial situation, DPA programs are worth a look. With thousands of programs across the country to choose from, the right DPA could give you a boost and help you close on your dream home!
*Last updated on 8/9/2019*
Sources:
*Economistsoutlook.blogs.realtor.org/2017/04/06/eighty-percent-of-first-time-homebuyers-put-down-less-than-20-percent-downpayment-based-on-december-2016-february-2017-closed-sales/
**Downpaymentresource.com/category/homeownership-program-index/