(DailyChive.com) – With rising real estate prices and strict lending standards, coming up with enough down payment for your home is a difficult task. Nonetheless, a lack of funds should never stop you from acquiring that dream house.
You can use down payment assistance programs (DPAs) that help financially-disadvantaged citizens pay their down payment. Below, we introduce the various DPA programs available to US citizens. We also explain how the DPAs work.
How Does Down Payment Assistance Benefit Citizens Buying Homes
DPAs are special financing schemes that provide the support you need to settle down payment and closing costs. This financial assistance is often offered by government organizations in cooperation with private lenders. The financial support is mainly available to:
- Low to moderate-income earners
- Veterans
- First-time home buyers
- Citizens buying homes in designated areas
There are two main categories of DPAs; loans and grants. The DPA loans have more flexible terms than ordinary bank loans. However, you have to repay with low interest. On the contrary, grants are free; so, you will not have to repay.
Many factors determine the amount you receive in down payment assistance. Factors may include your income, type of DPA, and credit score. The home’s cost will also determine the amount you receive as a loan or a grant. Although, not every citizen qualifies for down payment assistance.
Down Payment Assistance Programs to Consider When Buying a Home
American homebuyers have numerous down payment assistance programs available to them. Some DPAs are offered by the government, and others by private organizations. The most common programs you can try when trying to buy a home are:
1. Federal Loans
The government offers several loans that you can use to finance your down payment. The Federal Housing Administration loan is the most popular option. It sponsors your first home as long as you can make a down payment as low as 3.5%.
Other federal loans you may consider when looking for assistance to settle your down payment include:
- VA home loan. VA home loans are provided by private providers guaranteed by the US Department of Veterans Affairs. The loans offer favorable terms to veterans needing to purchase a home without a down payment.
- USDA loans. Like the VA home loan, USDA loans are offered by private lenders through the United States Department of Agriculture. These USDA loans are available to low-income citizens buying a home in a rural setting.
2. Chenoa Fund
CBC Mortgage Agency offers the nationwide Chenoa Fund DPA program. Eligible homebuyers for the Chenoa Fund can receive down payment assistance of up to 5% of a home’s purchase price.
To qualify for the Chenoa Fund, homebuyers must meet specific requirements. As an example, you must have a credit score of approximately 620. Moreover, to be eligible for the Chenoa Fund, you must complete a homebuyer education course.
3. Down Payment Assistance Grants
Down payment assistance works differently than federal and VA grants. Grantees do not have to repay the funds. Many times, down payment assistance grants are given to low-income citizens.
Like other DPAs, state and local governments, employers, and nonprofit organizations offer grants. As with down payment assistance loans, there are eligibility requirements for grants. Thus, you will only receive free financial support if you meet the specified grant requirements.
Finding it Hard Paying Your Home Down Payment? Take Advantage of DPAs
A lack of a down payment should not keep you from buying your dream home. Take advantage of down payment assistance programs, FHA, USDA, grants, and VA loans. These loans have favorable terms and are readily available to eligible citizens. They will ease your path to homeownership.
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