Many times, when you hear “down payment assistance” (DPA), you think of first-time homebuyers. However, the first-time homebuyer programs of today, are a whole lot more, and down payment assistance isn’t just for first-time homebuyers anymore. First Centennial Mortgage offers several DPA programs available to non-first-time homebuyers, too!
So, what is down payment assistance? DPA is a great way to help you buy a home that you would not otherwise be able to afford. DPAs provide a set amount of money to qualified homebuyers to cover their down payment or closing costs. The money you receive through the program may be considered one of three things: a grant, an interest-free loan or a debt you pay off in the future.
Not everyone will qualify for down payment assistance and each state has its own rules for determining eligibility. Generally, it’s based on your income and how much home you’re buying. Typically, you’ll have to agree to live in the home and use it as your principal residence for a certain period to avoid having to repay the money. If your down payment assistance is treated as a loan, it would have to be paid in full if you sold the property or finished making all your mortgage payments.
Here are 3 ways down payment assistance can help a qualified homebuyer purchase a home with less money out of pocket:
- The most popular way – You have good credit and good job stability but have not been able to accumulate a large amount of money to use towards down payment and closing costs. This is where DPA comes in.
- Bridging the Gap – You’ve been able to save some money, but not quite enough. DPA is a great way to bridge the gap between what you need to put down and what you can put down.
- Reserving Your Funds – You have enough money saved for down payment and closing costs. However, you find a home that’s perfect, in the right school district, close to work, near your parents, etc. but it needs updating. The carpet needs to be replaced, the tile in the bathroom is from the 1980’s and the kitchen needs new appliances and new counter tops. This is where DPA comes in. Keep the funds you were going to use for the down payment and closing costs for renovation and let DPA help you cover the down payment and closing costs.
In all 3 cases above, DPA saves the day! If you are interested in buying a home and want to find out if you qualify, give us a call today!