This year has been full of challenges and a lot of unknowns. At Down Payment Resource, we’ve shared in those ups and downs, but we’ve also found a few silver linings in celebrating the unexpected.

Celebrating Homeownership Programs

At the start of the pandemic, we began monitoring the impact of COVID-19 on homeownership programs and first-time homebuyers. While program providers decided on “work from home” best practices, there was a temporary drop in available programs at the city and county level. However, state housing finance agencies, which comprise nearly 24 percent of all homeownership programs, never closed or paused business during the pandemic. 

And with low inventory and increasing sales prices, more industry professionals are seeing the benefit of down payment programs for their buyers. These programs can help offset closing costs, which is a huge boon for sellers. Down payment help also means buyers can use their savings for other homebuying expenses such as moving, home repairs, upgrades and furnishings.  

Celebrating Education

This year marked our first attempt at providing education directly to homebuyers with our six part webinar series, The Path to Homeownership. The series took potential homebuyers through each step of the homebuying process, from housing counseling to mortgage options and even what to consider after closing. 

We’ve also held nearly 30 webinars this year for industry professionals, with topics ranging from how to grow first-time homebuyer business to economic forecasts and reporting. Our attendance levels at these webinars are consistently high, which reinforces the fact that lenders and real estate professionals are eager to learn more about homeownership programs and how to find them.

Celebrating Homebuyers

According to the Bank of America 2020 Homebuyer Insights report, nearly 90 percent of homebuyers surveyed are still motivated to buy, despite the pandemic. And why shouldn’t they be? Historically low rates make payments more affordable, and with the help of a down payment program, buying a home could be a reality sooner than some may think.

In 2020, over 1.2M consumers came to Down Payment Resource to find down payment help. Take Natasha, for example. She was able to close on her first home this year, and we were thrilled to be a small part of that process.   

“I just want to thank DownPaymentResource.com for giving me the tools to educate myself. With this info, I just closed on my first home. It was a condo in South Florida, and it was a bit hard trying to find what programs are within the approval guidelines, but it all came together. The knowledge I gained started from your website.” 

Thanks to Natasha for reaching out, and congrats on your new home!  

Are you looking to buy a home next year?

While the homebuying process can be overwhelming, finding down payment help doesn’t have to be.

If you’re hoping for homeownership in 2021, focus on that goal and empower yourself with information that can help you make it happen. Here are a few ideas:

1. Take a homeownership class. Start by connecting with your state or local housing finance agency. You can also check out online homebuyer education, such as eHomeAmerica.
2. Interview 3 lenders to find the best fit for you.
3. Research down payment assistance programs in your market.
4. Review your budget and outline what type of monthly housing costs your income will support.

We’d love to hear more about your path to homeownership. Share your story with us, and you might inspire another future homeowner to take the first steps.

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Representing over a third of all homebuyers, Millennials are a driving force for the housing market and its recovery. However, these buyers are facing a lot of uncertainties when it comes to homebuying, and their concerns have little to do with the pandemic.

Cultural Outreach, in collaboration with National MI, recently published their 2020 NextGen Homebuyer Report. They surveyed 1,450 NextGen homebuyers (ages 22-37) in April and September to learn how this generation feels about buying a home in the midst of a pandemic. 

What’s good?

Despite the ups and downs of 2020, NextGen buyers are staying optimistic. Nearly 70% say the pandemic has had little to no effect on their homebuying plans, and 77% say buying a home is still their financial priority. 

Also, this generation has remained financially fit, with 77% reporting less than $20K in consumer debt, including student loans. 

What’s not so good?

One unfortunate statistic is that 1 in every 5 of these potential buyers stated they aren’t confident in ANY step of the homebuying process, from contract to closing. 

Savings and the burden of a monthly mortgage payment are other big homebuying concerns. According to the study, affordability remains the biggest fear (68%), with 77% saying down payment is the primary obstacle. 

They also expect to have to cover the entire down payment themselves, and nearly 70% of these potential buyers are saving less than $500/mth toward a down payment. 

Even worse, only 25% are aware of DPA in their market. 

How do we help?

This study brings to light a huge opportunity for housing industry professionals to ramp up their education and advocacy platforms, including down payment assistance options.

There are currently over 2,300 homeownership programs available across the country, including affordable first mortgages, tax credits and non-repayable grants. 

Help is available, and we must work hard as an industry to disprove the myths that may cause buyers to remove themselves from the homebuying market.

If you’re a homebuyer, seek out real estate and mortgage professionals who are willing to educate you on the homebuying process and provide the type of service and guidance you need to become a confident homeowner.

If you’re a professional, look for marketing and education opportunities that will move the needle in a positive direction for new homebuyers. You’ll be building your own future, too.

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Are you an industry professional? Download our latest Down Payment Report for the data and news on first-time homebuyers and residential down payments.

Buying a home is more challenging than ever in today’s Pandemic-driven housing market.  While mortgage rates are historically low, so is inventory.  Housing prices in the U.S. are up an average of 4% vs. last year at this time, and many markets are consistently experiencing overbids and multiple offers.  

This doesn’t mean first-time buyers should give up on buying a home, but it does take more planning, time, and effort.  Given below are some tips to help you more easily navigate the process.

Start with a housing counselor or lender and check out different down payment options.

As much as we love to look at houses online, you need to first make sure your finances are in order and determine what you can afford before you shop.  Many real estate agents won’t even show prospective clients properties without a pre-approval – and you’ll definitely need one prior to submitting an offer.  

Further, contrary to popular belief, you don’t need 20% down.  In fact, it’s more important to retain some savings to protect yourself from unplanned expenses. While many lenders are tightening up qualification requirements due to the pandemic, there are still many down payment assistance programs available that can help cover closing costs that will help give you an advantage over other buyers.  

Down payment assistance programs often require you to complete a home buyer education class.  That’s why it’s important to find out if you’re eligible for down payment help, and get started with the process early.  

Finally, most lenders are requiring additional documentation and might even want to verify your employment just before closing.  Given that many people are still working remotely, give yourself extra time to gather the documentation and verifications you will need. 

Pro Tips:  

• Research down payment assistance programs in your area. Contact the agency offering the program or a homeownership counselor who can help you with the process.
• Complete required home-buyer classes as soon as possible – that way, you won’t be scrambling at the last minute.
• Let your employer know you’re potentially purchasing a home and find out who you need to contact to receive employment verification. You may also want to inquire if your employed has homebuyer incentives available.

Find an agent to help you navigate your local market before you start looking.

Many areas are experiencing short listing times, over-asking price bids, and multiple offers.  Work with your agent to understand what’s happening in your market before you start looking.  For example, if homes are selling for 10 – 20% over asking, you may need to search for lower-priced properties to find a home within your budget.  

You also might need to submit an offer the day you view a property or commit to a quick-closing.  Have all of your paperwork and finances ready to go in case you find THE house and have to move quickly.

The Pandemic has made it harder to view homes in person, and you might have to rely more heavily on photos and virtual tours.  Be sure to look beyond the “beauty shots” to determine whether or not a property is right for you.  

Pro Tips:  

• Properties in need of a little TLC or haven’t been staged are more likely to have fewer offers than those that are move-in ready.  
• Have your agent do a “video walk-through” of a property if you can’t see it in person.  They’ll be able to point out potential issues, go at your pace, and focus on specific features.  

Buying a home in today’s competitive market can be challenging, but with good advice from your homebuying team, as well as some upfront planning, you’ll soon be living the American dream. 

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Are you an industry professional? Download our latest Down Payment Report for the data and news on first-time homebuyers and residential down payments.

Down Payment Resource, the nationwide database for homebuyer programs, today released its Third Quarter 2020 Homeownership Program Index (HPI). The number of total programs is 2,340, and over 81 percent (81.1%) of programs currently have funds available for eligible homebuyers, down a little less than 2 percent from the previous HPI. 

Down Payment Resource (DPR) communicates with 1,138 program administrators to track and update the country’s wide range of homeownership programs, including down payment and closing cost programs, Mortgage Credit Certificates (MCCs), affordable first mortgages and more. 

Overall Impact

Though we’ve noticed a slight and mostly temporary drop in available programs at the city and county level, it’s important to note that state housing finance agencies (HFAs), which comprise nearly 24 percent of all programs, have not closed or paused business during the COVID-19 pandemic. 

Stockton Williams, Executive Director of the National Council of State Housing Agencies (NCSHA), discussed the COVID pandemic and its impact on HFAs and lenders in an interview in the June/July issue of the Down Payment Report.

According to Mr. Williams, “the last several months have been a tumultuous time for the mortgage finance system and everyone who is involved with providing housing lending. There have been lenders who have pulled back from originating loans for low- and moderate-income borrowers for a variety of reasons, including general economic stress, or pivoting to do more business in refinances since rates are so low. There is also a lot of concern, which, frankly, state HFAs share, about some of the actions FHFA, FHA, Fannie, and Freddie have taken and not taken. Those have all contributed to uncertainty in the markets.”

The good news though, as Mr. Williams put it, is that “more often than not, we are hearing that state housing finance agencies are doing as much or more business than they were at this time a year ago, and in a number of cases, they are doing more. A handful of state HFAs have even told us that they have had record production in recent months.”

As of August, over 81 percent of all DPAs were actively funded and available, and less than 2% had temporarily paused their programs due to the pandemic.

Forbearance and Delinquencies

Although state HFAs have maintained business as usual through the pandemic, they had to explore more flexible arrangements regarding forbearance. 

A key take-away from this year’s National Association of Local Housing Finance Agencies (NALHFA) annual conference was that it’s becoming apparent forbearance claims near the start of the pandemic were expressions of consumer caution. Claims have since slowed, and reports from May and June show monthly mortgage payments are being made. However, there is worry of potential volatility still to come.

MBA reported this month that the share of mortgage loans in forbearance declined for the 8th straight week, but according to CoreLogic, delinquency rates are rising.

HFAs are trying to work with their master servicers and participating lenders on flexibility with loan level pricing adjustments (LLPAs) and purchase timelines related to loans that enter forbearance.

HOME and CDBG Funds

Per the HPI, over 32 percent of programs are funded by HOME Investment Partnership Program (HOME) and Community Development Block Grant (CDBG) funds. As states begin rolling out COVID-19 housing relief programs, and as municipalities begin planning for HOME and CDBG allocations this Fall, it’s important to track funding status and even forecast expectations for 2021.

Many of these relief programs are leveraging CARES Act and Emergency Solutions Grant (ESG) funds, but may also use any remaining HOME and/or CDBG funds. Any impact on DPAs will likely begin to trickle down later this year in the form of constrained DPA budgets. 

The good news is the House Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies passed its fiscal year (FY) 2021 appropriations bill, which will significantly increase HUD funding for housing programs, most notably HOME and CDBG.  

Other Findings to Note

The HPI reports an increase in the share of down payment and closing cost assistance programs:

78% of programs in the database are down payment or closing cost assistance — a 1% increase from the previous HPI. 

• 65% of all DPAs include payment deferral for some period of time.
• 44% of all DPAs are partially or fully forgivable.
• 39% of all DPAs are both deferred and forgivable.

6% of programs are first mortgages — a 1% decrease from the previous HPI. 

5% of programs are Mortgage Credit Certificates (MCCs) — a 1% decrease from the previous HPI. 

11% are additional programs, including matched savings programs and Housing Choice Vouchers (HCV).

Download the complete Q3 2020 HPI press release.

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Are you an industry professional? Download our latest Down Payment Report for the data and news on first-time homebuyers and residential down payments.

Economists agree that the real estate business has recovered faster than expected during the pandemic. A continued lack of inventory, low mortgage rates, and pent-up demand are all contributing factors to a robust market.

The good news for homebuyers is that down payment assistance is still available, with many program providers offering online and virtual support/education. With an average benefit of $13,000, these programs can help make the difference in achieving homeownership when competition is fierce.

In a recent appearance on the “Real Estate Coach Uncensored” show with Bernice Ross and Greg McDaniel, our very own Rob Chrane, CEO of Down Payment Resource, discussed the different types of down payment programs available and how they represent an opportunity for real estate agents and loan officers to expand their client portfolio.

Many prospective buyers are unaware of the scope of these resources or don’t think they’ll qualify. Our goal is to dispel several of the most common myths surrounding these programs.

Myth #1: They’re only for first time buyers.

Over a third of the down payment programs don’t have a first-time homebuyer requirement. Further, previous homeowners who haven’t owned a home for at least 3 years can qualify as first-time buyers.

Myth #2: A 20% down payment is always better.

Many of the programs offer a variety of down payment options which can keep prospective borrowers from draining their savings accounts, thus giving them more liquidity to handle the many unexpected costs that come with home ownership. In fact, a study by JP Morgan Chase showed that borrowers with at least 3 mortgage payment equivalents of liquidity had lower default rates than those who had more equity, but less liquidity.

Myth #3: Buyers using down payment programs are considered less appealing.

Industry professionals well-versed in these programs say that it can be just the opposite, since several of these programs cover closing costs – fees that prospective buyers often asks sellers to cover. Also, since nearly all down payment programs require homebuyer education, these buyers are more knowledgeable about the process and expenses surrounding homeownership.

As a continuation of our efforts to educate and inform, we celebrated Homeownership Month with our first ever homebuyer webinar. The overwhelming response proved that buyers are eager to learn more about homeownership and the role down payment assistance may play in that process.

Real estate agents and loan officers should consider hosting a home buyer seminar on down payment programs, include information about them on your website or blog, or cover the topic on social media. Down Payment Resource makes it easy to showcase these programs with a variety of tools and resources created specifically for loan officers and real estate agents.

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Homebuyers are wondering what COVID-19 will mean for their home financing plans. Will down payment assistance be available? Are low down payment loans still available? What about credit score and employment verification changes?

The good news is that down payment assistance programs and low down payment loans are still widely available. However, the market is very fluid and some programs modified eligibility requirements and made process changes.

Here are facts about down payment programs you should know:

1. We track approximately 2,400 homeownership programs. Currently, only 34 programs are temporarily suspended. That’s only 1.5% of total programs across the country.
2. All state Housing Finance Agencies (HFAs) are open and accepting reservations virtually.
3. Virtual homebuyer education has expanded. Homebuyers can take advantage of homebuyer education courses that are now being offered online.
4. Credit standards are rapidly changing. Homebuyers should remain in communication with their loan officer to ensure they still meet current credit guidelines to qualify for a loan and down payment program.
5. Some down payment program requirements have changed. Homebuyers should work with their loan officer to understand new down payment assistance requirements, additional documentation, verification of employment, and any loan pricing changes.
6. Current homeowners can reach out to a trusted advisor, such as a housing counselor, to understand their options with the servicer if they are not able to make their mortgage payment due to a reduction in income as a result of COVID-19.

Here’s what you can do now to keep your homeownership goal on track:

1. Research down payment assistance programs that may work for you.

2. Interview 3 mortgage lenders who participate in down payment assistance programs (ask them what programs they offer).

3. Take online homebuyer education — most certificates are good for a year and you’ll be ahead of the game.

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Learn how we help our business partners connect homebuyers to down payment help they need to buy a home.

There are many challenges as a result of COVID-19, but it doesn’t mean you have to put your homeownership dream on hold. This is a great opportunity to use online resources available to get prepared for the home buying process and connect to the right experts.

We answer the most common questions from first-time homebuyers to help guide you during this pandemic. 

How low will mortgage rates go?

The Fed cut interest rates to 0%, but that doesn’t mean mortgage rates are at zero. While mortgage rates are still very low, lenders are also managing the refinancing demand so rates have been fluctuating. According to many economists, we might expect mortgage rates to hit new record lows and remain low until this crisis is over.

Your best bet here is to shop and compare your mortgage offers. Your mortgage rate can make a big impact over the life of your loan, but it’s not the only factor to consider. Make sure you ask these five questions when interviewing lenders.

Are down payment assistance programs still available?

Yes, programs are still available during this crisis. We are seeing many program providers moving homeownership education to online only, taking applications from their remote offices, and temporarily suspending the availability of some programs and rate locks. It’s important that you research your options for your situation and build in some extra time to apply for available programs in your market.

You can read more about the impact we are seeing on down payment programs and how we are keeping our database current.

Can I do homebuyer education online?

Yes! This is the perfect time to educate yourself on the process and knock out homebuyer education. The good news is that those options have expanded with more down payment assistance programs allowing online homebuyer education. Plus, once you complete your homebuyer education course, you’ll be a much more prepared and successful homeowner. Homebuyer education certificates are typically good for one year.

If you are using a homeownership program, verify with your lender or housing finance agency what courses are approved.

Here are some good places to begin:

1. ehome America online homeownership counseling.
2. MyHome by FreddieMac walks you through financing your home purchase.
3. ReadyNest homebuyer education test.
4. Keep’s special resources for homeowners and homebuyers during this crisis.

How can I shop for a home?

Now that we’re spending more time at home, you might as well own it, right? With social distancing, shopping for a home will look a little different. The situation is fluid, but here are some changes Realtors are making:

1. New showing procedures. Talk to your Realtor about procedures in your market. During a showing buyers may be asked to wear gloves and booties over shoes. And, only the Realtor may touch door knobs, light switches, etc. during the tour. Realtors are thoroughly disinfecting before  and after showings.
2. Online home tours. Some Realtors are offering to do live Facetime tours with perspective buyers. We also see more listings enable video and virtual tours so buyers can get a better feel for a space.
3. New home shopping. If you are looking for a new construction home, check out these tips for shopping for a new home online.

Now is the time for open communication. Stay connected to your Realtor and lender so you are informed as this situation continues to evolve.

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Learn how we help our business partners connect homebuyers to down payment help they need to buy a home.