One of the biggest challenges for potential homeowners is covering the closing costs and furnishing the money for a down payment. Home buyers who need assistance financing their down payment have a few options available to them. Down payment assistance loans, alongside other local programs, provide borrowers with a loan to pay for closing costs.
Down payment assistance is not just for low income home buyers. There are a variety of programs for down payment assistance, most allowing the borrower to earn up to 120% of the median area income.
While the economy heals and borrowers are getting back on their feet, many people are finding it hard to come up with money to close on a home. To remedy this, banks offer borrowers a number of different down payment assistance programs that range from interest free second mortgages, to grants and special loan programs.
The economic lull of the previous decade has affected everyone financially in some way, making good credit hard to build. There is still help available for homebuyers looking for an affordable way to purchase a home with no money down. Following is a brief walkthrough of some of the most popular down payment assistance loans for home buyers. You can contact to a loan specialist in your area to find assistance programs for your county and state.
TheNeighborhoodLIFT and CityLIFT Programs are funded by Wells Fargo, and offer down payment assistance to buyers in areas that have been hit hard by the economic crisis in the housing market. Up to $30,000 of grant money is available to qualifying buyers for down payment assistance. Since this is a grant, the money does not need to be repaid as long as the buyer stays in the home for 5 years.
The grant is given with a 0% interest rate, and 20% is forgiven annually, for five years. For the first five years, if the house is sold, refinanced, or foreclosed upon, and the title has changed hands, the grant becomes a loan and the balance needs to be repaid.
The Individual Development and Empowerment Account Program (IDEA) and the Workforce Initiative Subsidy for Homeownership Program (WISH) are programs offered by multiple financial institutions owned by the Federal Home Loan Bank. Each of these programs grants the homeowner $3 for every $1 saved for the down payment and closing costs, up to $15,000.
The FHA Access Loan Program allows buyers to get a loan for 103% of the property’s purchase price. This program combines an FHA first mortgage and an Access 2000 mortgage to help pay for closing costs. There is no approval needed from the main lender, but there are income and loan amount caps.