Thinking about purchasing your first home? Ah, the excitement is quite inexplicable. With the excitement, comes a shock. How are you going to manage a 20% down payment? Not only do you have to prepare for the interest rates, but you also need to save for a down payment. As you are going to make a down payment, you should pay more focus to it. Many borrowers have the opportunity to receive the down payment as a gift from their family members. What if you cannot find an eligible person to gift you this upfront cost? At such critical moments, you should resort to down payment assistance programs.
The home-buying process is not stressful as you might think it would be. Various down payment assistance programs provide the necessary help. According to the study of the National Association of Realtors, 25% of the borrowers worry about the down payment. Small down payment loans are available, but you need to stay out of the risk factors as well. So, the local and state governments along with non-profit organizations offer different programs. From no interest to forgivable loans, there are a lot of options to explore. Moreover, borrowers with special financing situations can also apply for grants.
The down payment assistance to purchase homes in Texas does not cater to every borrower. You still need to pass the eligibility requirements and ensure a steady job. Moreover, the credit score guideline is stricter than usual. Overlooking the hardball, the programs are very much beneficial. So, here are the important things you should keep in mind.
Who should Apply for Down Payment Assistance Programs?
Future homeowners often find themselves in a financial crisis. 60% of renters have acknowledged that they have not applied for a mortgage due to a down payment. Saving for the down payment takes a toll on their monthly payments. So, the programs bring borrowers out of such obstacles. If you are a veteran or buying a property in a rural setting, you can get away with no down payment. Even conventional home loans also need a down payment as small as 3%.
Are the Down Payment Assistance Programs Helpful?
The DPA programs not only help you with the down payment but also with closing costs. Following are the main types of down payment assistance,
- You can apply for grants that you do not have to repay in the future.
- Loans with interests can be considered as second mortgages.
- Loans without interests might have to be repaid.
There is another type of forgivable loan – the amount does not need to be repaid when the borrower keeps the property over a particular period. The mortgages typically are available in the format of a 30-year fixed-rate and have regular market interest rates.
In the end, down payment assistance programs are extensively available in the market. Some of the options are not difficult to qualify. However, there are certain limitations. From steady income to a decent credit – many things factor in. So, talk to your lender now.