Available Programs & How to Apply

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Who can get down payment assistance?

Many first-time home buyers are eligible for down payment assistance, especially low-income and moderate-income people. Several programs can help military members and veterans, as well as certain public service employees.

The majority of down payment assistance programs set household income limits. These programs are designed to help low- and moderate-income earners. The income limit depends on the program, the median income where you live, and the size of your family.

Also, most programs are limited to first-time home buyers who will live in the home as their primary residence. To be a first-time home buyer, you can’t have owned or co-owned residential real estate for the past three years. If you own another home, even if you don’t live in it, you are unlikely to qualify as a first-time buyer.

Eligibility requirements vary by program but often include:

  • Being in the military (or a veteran)
  • Being a public service employee
  • Completion of a home buyer education program
  • A minimum credit score of 640
  • Your debt-to-income ratio
  • Location (like rural areas or specific cities and counties)

Keep in mind that you’ll still need to qualify for a mortgage through a mortgage lender. Read our first-time home buyer guide to learn about the home purchasing process. Even if you get help with the down payment, mortgage lenders will want to see some money in your savings. Some lenders require one month’s reserves or more. You aren’t likely to qualify if you have zero dollars in the bank. One of the nice things about DPA is that it lets you keep your money in savings toward the inevitable expenses of home ownership rather than use it for a down payment.

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What mortgage can down payment assistance be applied to?

Down payment assistance programs are generally designed to work with low down payment home loans. That makes sense since down payment assistance is often equal to the minimum down payment required for one of those loans. The administrator of the DPA program you pick can point you to the lender or loan that will work for you.

How to apply for down payment assistance

To apply for down payment assistance, your main task is to find programs that are available to you.

Down payment assistance programs can be hard to find. You may have to hunt around to find options in your area. There may be overlapping assistance programs in areas that are served by lenders, government agencies, and nonprofits.

Here’s a good place to start:

You can also contact the Housing Finance Authority in your state.

If you’re affiliated with the military, search for “military down payment grant” to find banks and private organizations offering down payment assistance.

Be persistent in your search. Private programs may not be listed on federal or state government websites. For example, the National Homebuyers Fund and the Chenoa Fund are available nationwide. The Chenoa Fund has down payment assistance programs with no income restrictions. Borrowers who miss the income cutoff can get a 10-year, 0% loan to cover their down payment.

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Once you find a program, you might be directed to apply with a participating lender. If you’re given a list of lenders, it’s a good idea to apply with a few so you can compare offers. Be sure to confirm that each loan officer is familiar with the DPA programs you’re considering. Even the best lenders for first-time home buyers can be unaware of how DPA programs work.

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View more information: https://www.fool.com/the-ascent/mortgages/down-payment-assistance/

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