Finance$ August 29, 2023

Can’t Bear to Buy a Home? Have You Contemplated Down Payment Assistance?

What’s the number one impediment for renters making the leap to homeownership? It’s that annoying down payment.

Even though with an FHA loan that only requires a minimum of 3.5% down, the thought of setting aside several thousand dollars is daunting, and for some, it seems nearly impossible.

According to a survey from Apartment List, the struggle for millennial renters is real, with 62% citing a lack of down payment savings as their reason for holding off on homeownership. Furthermore, 48% have zero down payment savings, and just 11% have saved $10,000 or more.

Fortunately, there are programs out there to help, but they’re just not always well publicized. So here are some tips for finding Down Payment Assistance:

Do a Diligence Search.

First, do a diligent search. You’ll be surprised how many programs you can find. “Do you even know that down payment assistance (DPA) programs exist? Well, you’re in good company if you don’t,” says The Mortgage Reports. “These programs help homebuyers with loans or grants that reduce the amount they need to save for a down payment. And there are more than 2,000 of them nationwide.”

Check out Statewide Programs.

Next, check out statewide programs. From the HUD site, you can search by every state plus the District of Columbia, Puerto Rico, and the U.S. Virgin Islands to see which programs are available for you.

Now Take it Local.

Then, don’t forget to check for programs in your city. For example, the City of Los Angeles Housing + Community Investment Department offers up to $90,000 in financial assistance for first-time, low-income homebuyers. In Memphis, there is a zero-interest deferred loan that provides funding for first-time homebuyers’ down payment and closing costs for eligible homebuyers through its Division of Housing and Community Development.

Search Base on your Profession.

Consider this: You’ve probably overheard about VA loans for military members and veterans, but other professions are eligible for down-payment assistance. The Neighbor Next Door Program is a program for law enforcement officers, firefighters, emergency medical technicians, and teachers that requires only a $100 down payment for eligible homebuyers. Additionally, because the program is tied to the idea of revitalization, homes in these communities are offered to eligible buyers at a 50% discount.

Go and Check with your Lender.

Lastly, go and check with your lender. Doing your own research is key, but once you know all the terms and programs, you still need the insights that only a lender is aware of and may affect your plans. Therefore, it’s a smart move to consult a professional who is familiar with your specific situation.