Homeownership programs are available nationwide, and the average down payment assistance benefit is currently between $10,000 and $12,000. These programs can help homebuyers get into a house sooner than they may think and give them a valuable cash cushion for other expenses, like the home inspection and possible repairs.

But what does it take to qualify for down payment assistance?

There are actually two components—both the homebuyer and the property must meet certain criteria. Homebuyers can use our search tool to determine if they (and the home they want to buy) may meet the basic qualifications for a program.

It’s also important to note that the criteria will vary by program. Here are a few things to keep in mind when searching for down payment help.

What are the requirements for the buyer?

Family finances matter. There are household income limits, credit score minimums and cash reserve requirements. Income limits are based on the area median income and will vary by household size.

Most programs will require some money down from the homebuyer, as well as homebuyer education, especially for first-time buyers. Homebuyer education provides important information on finding, purchasing, and owning a home to help ensure long-term, successful homeownership.

First-time homebuyer status. Many programs are available only to first-time homebuyers. But, keep in mind that first-time homebuyers are defined as someone who has not owned a home in three years. For example, if you previously owned a home, and you’ve been renting for the past four years, you’re a first-time homebuyer again!

Also, not all programs are reserved for first-timers—about 37 percent of homeownership programs don’t include that requirement.

Your profession may give you an edge. More than 12 percent of programs are designed for individuals providing an important community service, including educators, protectors, healthcare workers, and veterans. Especially beneficial in high cost markets, these programs help workers live in the community they serve.

What are the requirements for the home?

Must be a primary residence. Most program providers will require that the home be occupied as a primary residence. Investors need not apply.

Programs are available for single-family homes, townhomes and condos. Manufactured homes are allowed for an increasing number of programs, and some multifamily properties are allowed if the buyer is also an owner occupant.

Home sales price. The home sales price criteria for programs are typically set based on a percentage of the area median home price. This means the home price limit can go from $250,000 up to over $800,000 in certain high cost markets.

Programs are available everywhere. Many homebuyers mistakenly believe down payment programs are available only in certain areas. In fact, programs are available in every community across the country and often for homes at price ranges above the median sales price for a given area.

Remember the criteria can vary greatly, so it’s important to investigate the options for each homebuyer’s specific situation.

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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.

Have a success story to share? Please contact us at info@downpaymentresource.com.

Home prices are increasing faster than incomes, especially for younger households. Add in things like the pandemic and student loan debt, and it’s hard for many to see a path to homeownership.

Many millennials are turning to the bank of mom and dad. A recent report from Apartment List found that 63 percent of millennials surveyed do not have any savings for a down payment, and more than 20 percent expect financial help from family towards a down payment.

Alternative to the bank of mom and dad

Most buyers don’t know to look for down payment assistance that could help them save on their down payment, closing costs or provide tax savings. There are programs in every market designed to help otherwise qualified buyers overcome the down payment hurdle.

It’s also true that buyers are overestimating the down payment needed. Even this Apartment List study notes the difficulty saving for 20 percent down on a median priced home. But, 20 percent down is just a myth. In fact, the average down payment for a first-time homebuyer is only around 6 percent.

Instead, let mom and dad keep their retirement savings intact and do your research on the down payment help available in your market. There are even programs designed to help graduates with student loan debt.

An even bigger issue

Let’s also not downplay an even bigger issue. It’s primarily higher-income families who are able to support their adult children, however it’s renters from a lower-income background who are more likely to need assistance. This cycle reinforces existing wealth inequality that’s transferred from generation to generation.

Homeownership programs help address part of that issue. They give equal opportunity to eligible homebuyers, providing that leg up for buyers to get into the market and become homeowners.

Make mom and dad proud and do your homebuying homework, before going to them for help.

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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.

Have a success story to share? Please contact us at info@downpaymentresource.com.

Life is full of surprises. Don’t let the unexpected events of last year keep you from setting new year goals for 2021. 

It’s time to look forward and decide on your priorities for the coming year. If owning a home is on your list, these four simple steps can help jump start your journey to homeownership.

1. Simple budget review

How much are you currently spending each month on rent and other housing related expenses, like utilities? What is that amount annually? Do you anticipate any rent increases?

Take a look at your other expenses too. You want to have a solid understanding of your monthly income and expenses. This exercise will keep you from jumping into a mortgage payment that stretches you and your family too far.

And, with homeownership comes home maintenance so it’s important to have a cushion for those necessary (and sometimes fun!) projects.

2. Check in on your credit

If you’re not familiar with your credit history, or need a refresher, you can request a free copy of your credit report every twelve months from each of the three reporting agencies. 

After reviewing your credit, you may find you have some work to do. Don’t worry. Financial literacy and education is important for all homebuyers. A mortgage lender or housing counselor can also work with you to help repair your credit and prepare you for homeownership.

3. Interview lenders

Mortgages are never one size fits all. You want to work with a lender who can listen to your goals and budget to find the best fit for you. Make a plan to talk to at least three lenders before you make a commitment. Learn about their low down payment options, fees and the monthly and lifetime cost of your mortgage.

Check out our five essential lender interview questions for a guide on what to ask prospective mortgage lenders.

4. Search for down payment programs

Do you know about homebuyer programs that can help you save on your down payment and closing costs? Down payment programs can give you a major homeownership boost in the form of grants, forgivable loans and tax credits. But, they also require approvals and paperwork so you want to get your options on the table soon.

Investigate what’s available in the area you plan to buy. Use our program finder to answer a few questions about your household to narrow down your options. Review your results with your agent and lender.

Good luck and happy homebuying in 2021!

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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 help sounds great, but how does it actually work? What process should you follow?

While down payment programs vary greatly by state and community, there are some universal steps that will help you stay on track if a homeownership program is part of your home financing plan. Let’s look at how it worked for one Florida buyer highlighted in Business Insider.

One buyer’s story

Willy Harris, 24, and his girlfriend used a Florida first-time homebuyer program to purchase a $204,000 new construction home in Jacksonville, FL. The program allows first-time homebuyers within qualified income and purchase-price limits to receive up to $15,000 in secondary financing toward down payment and closing costs. If the homebuyer lives in the home for five years, the secondary loan is forgiven. Harris used a FHA home loan that required a 3% down payment.

They put down a $1,000 deposit to reserve the lot, while the grant covered their $7,750 closing costs and $6,150 down payment. The remaining amount of the grant went toward the principal of the home loan. Because they put 3% down, they also paid a monthly mortgage insurance premium of $109. Their first mortgage payment is currently $1,503 a month.

Harris recommends setting up a budget and savings plan, and researching programs that can give you a boost.

Check points to keep you on track

Follow these steps to get the most of using a homeownership program:

1. Do some upfront homework. Research local homeownership education and counseling services that can help you with the process.
2. Determine your budget. Figure how big a monthly mortgage payment you can afford on your salary. Don’t forget that your mortgage payment may include taxes and insurance too which you can estimate.
   Create a savings plan. Build a spreadsheet (or use an app) to track your expenses.
3. 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.
4. Both the buyer and the home must qualify for the assistance. Find out the home price limits and any community or neighborhood boundaries for the program that may impact your home search. Find out if you can use the program on new construction.
5. Get a list of participating lenders for the homeownership program, available on the program provider’s website. Not all lenders offer every program.
6. Get prequalified for a loan so you can review the numbers and make an educated decision on the type of financing.
7. Compare offers and ask lenders about any other programs for which you may qualify. You may even be able to layer programs, for example down payment assistance plus a tax credit.
8. Review mortgage insurance options with your lender.
9. Complete homebuyer education courses that are often required when using a down payment assistance program.
10. Ask about your options for using the funds. Can they be used for down payment or closing costs, or both?

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

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.

Along with year-end parties, comes New Year goal setting, right? It’s time to look forward and envision where you see yourself this time next year. Is owning a home on your list of goals?

Before you stumble upon that dream home while out looking at holiday lights, take these three simple year-end steps that will jump start your journey to homeownership. You’ll be well on your way to a new home before that New Year’s Eve countdown begins. 

1. Simple budget review

How much are you currently spending each month on rent and other housing related expenses, like utilities? What is that amount annually? Do you anticipate any rent increases?

Take a look at your other expenses too. You want to have a solid understanding of your monthly income and expenses so you know what you can handle for a mortgage payment. This exercise will keep you from jumping into a mortgage payment that stretches you and your family too far.

And, with homeownership comes home maintenance so it’s important to have a cushion for those necessary (and sometimes fun!) projects.

2. Interview lenders

Mortgages are never one size fits all. You want to work with a lender who can listen to your goals and budget to find the best fit for you. Make a plan to talk to at least three lenders before year end. Learn about their low down payment options, fees and the monthly and lifetime cost of your mortgage.

Check out our five essential lender interview questions for a guide on what to ask prospective mortgage lenders.

3. Search for down payment programs

Do you know about homebuyer programs that can help you save on your down payment and closing costs? Down payment programs can give you a major homeownership boost in the form of grants, forgivable loans and tax credits. But, they also require approvals and paperwork so you want to get your options on the table soon.

Investigate what’s available in the area you plan to buy. Use our program finder to answer a few question about your household to narrow down your options. Review your results with your agent and lender.

Good luck and happy holidays!

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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.

Homebuyer surveys report a big gap between perception and reality when it comes to down payments. And considering that saving for a down payment the number one challenge for new buyers, it’s probably time to brush up on your facts.

In fact, a new Fannie Mae consumer survey found little has changed in consumer knowledge from 2015 to 2018. Most buyers don’t know what’s required for a down payment and only 23% are aware of low down payment programs that could help them buy a home sooner.

Test yourself

Our friends at the Urban Institute developed a down payment quiz that promises to give you the right answer with helpful background if you miss a question…or two.

Ask your lender and real estate agent about low down payment programs and down payment assistance in your market. Shopping for a mortgage and doing your homework can pay off.

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Could a down payment program give you the boost you need to move up to your next home?

It’s true. In fact, our latest Homeownership Program Index found an increase in the share of programs without a first-time homebuyer requirement. This means more homeownership programs can serve repeat and move-up buyers.

And keep in mind a first-time buyer is defined by HUD as someone who has not owned a home in the past three years. So, if you’ve owned a home before, but have been renting the past three years, you’re a first-timer again.

But, most new and repeat buyers don’t know about all their down payment options.

Down Payment Resource featured on Real Estate Today Radio.

Down Payment Resource CEO Rob Chrane was recently featured on the National Association of Realtors’ Real Estate Radio show. He highlights how down payment programs combined with your savings can give you an even bigger down payment.

Listen to the 5 minute segment. 

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You may not be thinking about how homeownership can benefit you decades from now, but you should. A new study from the Urban Institute finds that the younger you buy a home, the wealthier you will be by the time you are 60 years old.

The impact of buying young

How much of a difference would it make to wait another 10 years before buying? Every year you put off buying your first house could cost you thousands of dollars in lost equity by the time you turn 60. In fact, there is a $72,000 difference in the median housing wealth of those who bought their first home between ages 25 and 34 and those who waited until they were 35 to 44.

Homeowners who bought their first home before they reach 34 are financially better off in their sixties — proving that the housing choices you make today could have long-term economic consequences in the future. The graphic below shows that those who bought a home before age 25 got the biggest bang for their housing buck.

“Deferring home purchases could have long-term economic consequences for millennials and the nation’s economic well-being,” concluded the study’s authors, Jung Hyung Choi and Laurie Goodman.

Millennial homeownership rate

The Millennial homeownership rate is about 38 percent, just over half the national rate and about eight percentage points lower than that of the two previous generations (Gen X and Baby boomers) at the same age. Today’s older adults became homeowners at a younger age than today’s young adults — and they are reaping those benefits today.

But nearly half of Millennials have yet to save a dime for a down payment and nearly two-thirds will have to save two decades or more to afford a 20 percent down payment. Only by taking advantage of the low-down payment options available today will most Millennials and Generation Zers have a chance to realize the wealth effect of buying young.

Find out what types of homeownership programs may help you get in a home sooner than you thought possible.

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Among life goals, homeownership is second only to retirement – ranking higher than getting married, having children and traveling the world, according to Bank of America’s Homebuyer Insights report. Where do you rank homeownership? If you’re here, you might agree that owning a home is a top priority.  

Yet, you may be overlooking the wide range of resources available to help you achieve your homeownership dream — from homebuyer education to down payment help. Recent data shows just how many buyers may be leaving money on the table.

Are you missing out?

The Urban Institute’s Barriers to Homeownership Report looked at how many 2017 purchase mortgages would have been eligible for down payment help. Across 31 of the largest cities, about 36% or 789,000 loans were eligible for at least one homeownership program. The average loan was eligible for approximately 6 programs and $9,208 in down payment help. That’s valuable help that can help boost your homeownership potential.

Across the country there are more than 2,500 homeownership programs available to homebuyers – more than one program in every market. What can you do to be sure you don’t overlook an option for your personal situation?

4 steps you can take

Empower yourself as a homebuyer with these four important steps:

1. Research programs in your market using our free online search tool.
2. Connect with your state and local Housing Finance Agencies. You can also research housing nonprofits in your area who may administer programs.
3. Interview lenders and Realtors — ask them about down payment assistance in your market and their experience with first-time homebuyers.
4. Take a homebuyer education course. Here are some places to start: Greenpath, NFCC and eHomeAmerica.

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Are you willing to wait seven years to save for a down payment? According to Zillow, that’s what it will take for buyers today, making it the longest to save for a down payment since the height of the housing crisis in 2008.

We know buyers are up against rising interest rates and home values outpacing income growth. But, is seven years really the new normal?

20 percent down not required

When we take a closer look, Zillow’s study (and many others like it) are assuming a 20 percent down payment. Yet, the average first-time homebuyer puts down only about six percent today. Furthermore, there are many loans that offer very low down payments to buyers. In fact, the wealth and diversity of low down payment options available today may be the most important reason that first-time buyers still account for nearly one-third of home sales despite higher home prices. So, don’t let that seven year savings plan scare you.

The real answer to how long it takes to save for a down payment? It depends. Empowering yourself with information about your home financing options can give you an edge and get you in a home much sooner than the headlines tell you.

Are you already mortgage ready?

Consider a recent report out by the Urban Institute that found most (about 88%) of the mortgage-ready millennials in the U.S. earn enough to afford a typical house in their city. Are you one?

Plus, there are down payment programs that can give you a boost or even cover your down payment and closing costs. Homebuyer programs are available in every market — find out if there’s one that fits your personal situation. We track more than 2,500 of these programs in our databank.

Ask your agent, lender and local housing agency about home financing options that require less down and programs that can provide down payment help. With a little homebuyer education, some research and professionals who know their stuff, you can shave years off your homeownership wait.

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