If you have made the choice to buy a home, it is a step in the right direction! However, that means you have enough funds to invest but may still need a mortgage. In most cases, purchasing a home normally requires making a down payment on the purchase price of the property. The amount of your down payment will usually vary based on the particular type of home loan program that you’ve chosen. This amount is subtracted from the selling price of the home in order to determine the amount of your home loan. Furthermore, the larger the down payment you make, the more favorable the interest rate you receive. Unfortunately, many home buyers, especially first-timers, cannot afford a sizable down payment. However, DPA or down payment assistance programs are currently available in certain areas and can help you pay for some of your down payment and eliminate any delays in becoming a homeowner. While most DPA loans were designed for the first-time home buyer, there are options available for those who are repeat buyers. The following are the 5 different types of down payment assistance programs:
Types of Down Payment Assistance Programs
- Deferred-payment loans – if you need assistance with your down payment, this can be a good option. These 0% second mortgages don’t have to be repaid until your move, refinance your original mortgage, or sell your home. These loans aren’t forgivable so they will have to be paid back when you leave the home.
- Forgivable loans – these are second mortgages that will be forgiven provided you remain in the home for a specified number of years. One of the benefits of forgivable loans is their 0% interest rate. Plus, you won’t have to repay them as long as you meet the requirements.
- Grants – DPA grants are gifts that help cover your down payment amount. These don’t need to be repaid. Because it’s FREE money, grant programs are the best down payment assistance programs available.
- Low-interest loans that are paid down – if you qualify for these low-interest second mortgages, you can use the money to cover your closing costs as well as your down payment. These loans are repaid monthly just like your first mortgage which means you will have two monthly mortgage payments. Some are available with 0% interest.
- Matched savings programs – also referred to as “individual development accounts”, these programs can help when making your down payment. These are typically offered through government and non-profit agencies. The program institution matches the amount you deposit into your dedicated savings account so you can eventually use it towards your down payment.
Contact Granite West Funding Today!
For more information about down payment assistance programs, call Granite West Funding today at (559) 540-2275.