First-Time Homebuyers: How To Get Help with a Down Payment

Being a first-time homebuyer is an exciting dream for many people, especially those who struggle with saving enough money for a down payment. Buying a home is a big financial decision, and whether you’re building a home or your dream home comes equipped with an irrigation system, there are ways to get help with a down payment to get into your dream property.

What Programs are available?

These are some of the most in-demand programs available for interested buyers:

  • A USDA loan: For those looking to purchase in rural areas, The US Department of Agriculture is 100% guaranteed.
  • FHA Section 203(k) loan program: If you’re looking to make home improvements, this loan program allows funds to be rolled into your existing mortgage.
  • Local plans: Many states across the country offer individual assistance programs. This can include low-interest loans or funds to cover the closing costs.
  • US Department of Veterans Affairs loan program: The Veterans Affairs loan program is specifically for military personnel, veterans, and their families.
  • Native American direct loan: Veterans Affairs back this program. It’s geared towards Native American veterans to renovate, construct, or purchase a new home on federal trust land.
  • Federal Housing Administration loan program: The FHA offers the program. It’s perfect for those who don’t have the best credit score, but they have some money saved for their down payment.
  • Fannie Mae or Freddie Mac loan program: These two agencies are two significant lenders for mortgages. Their loan programs are ideal for those with a great credit score, and it allows them to put a three percent down payment on the purchase price.
  • Energy-Efficient mortgage program: This program will enable homebuyers to purchase energy-efficient upgrades like appliances and lighting, and roll it into their mortgage upfront.
  • HomePath ReadyBuyer Program: After recipients complete the program-mandated homeownership course, they can only purchase a foreclosed property owned by Fannie Mae. They may receive assistance for three percent in closing costs.
  • Good Neighbor Next Door buyer aid program: The US Department of Housing and Urban Development offers teachers and first responders this program. Law enforcement officers like Police officers, firefighters, or EMT are also eligible.

How Do I Qualify for a Down Payment Assistance Program?

There are various programs available with different qualifications, but typically they are geared towards those who have never owned a home. However, some allow previous homeowners to apply, but they need not have owned a home in over three years. Double-check each program’s qualifications before applying. Most programs have requirements based on income, credit score, the home’s location, budget, and contribution to the down payment.

How Does it Work?

Down payment assistance programs are either run through your state, finance agencies run by the state, or government programs through counties or cities. These programs’ goal is to give everyone the opportunity to buy a home and make homeownership more attainable. Often, these programs are combined with first-time buyer-specific mortgages.

The few different options for assistance includes grants, low-interest loans, and zero-interest loans. Grants are essentially receiving your down payment as a gift and do not need to be paid back at any time. Low-interest loans are loans with a much better interest rate than you could receive with competitors. The loans are typically ten years long, making it affordable and easy for buyers to pay back. Zero-interest loans include two different options: forgivable loans and deferred payment loans. Forgivable loans are loans that don’t need to be repaid after a specific time, as long as the buyer still lives in the home. Deferred payment loans are typically outstanding until the home is sold or paid off, but it depends on the lender’s terms and conditions.

How Do I Apply?

First things first, research is required to determine which programs are available to you and which ones you qualify for. Your specific state will have options available to you. It’s the perfect time to find out which program is best for your situation. Many programs are not well-known, so they typically go unused, and they may take some digging to find. Apply for as many as you are eligible for. Once you find a few that meet your needs, look at the requirements, and see if there’s any work that you need to do in order to qualify. Whether that means improving your credit score or saving a smaller portion of the down payment, you can determine your next steps at this point.

Getting into your dream home sooner is possible with the help of down payment assistance programs. You don’t have to push off homeownership due to a lack of a down payment. Choosing a Realtor with the expertise to find the right home is an important part of the process. They can help make the process much easier and stress-free.


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