Down Payment Assistance Programs And Grants: What They Are And How They Work
Worried that you can't afford a down payment on a home? Here's some good news: If you're a first-time home buyer, you might qualify for down payment assistance provided through a government agency or private organization.
Let's look at what home down payment assistance is and how it works, plus some different down payment assistance programs to consider when buying a house.
How Does Down Payment Assistance Work?
As already noted, down payment assistance comes in the form of grants, loans and other programs, and it's typically reserved only for borrowers who qualify as first-time home buyers. Down payment assistance programs can be run by a variety of organizations, including the U.S. Department of Housing and Urban Development (HUD), your local or state housing authority, or a nonprofit.
Eligibility is determined by your household income and credit history, and it varies by state and program. You'll typically need to apply for assistance by submitting a formal application, and sometimes you're also required to attend training or home buyer education on the mortgage process and maintaining finances.
How much money you're awarded differs depending on the program. Some programs offer a percentage based on the home's sale price, while others cap assistance at a certain dollar amount. When looking at programs to apply for, research their requirements, whether it's a grant or a loan, and how much assistance you can receive.
In addition, you should look to make sure the down payment assistance you're applying for will be acceptable to your lender.
Find out how much you can afford.
Your approval amount will give you an idea of the closing costs you'll pay.