Buying your first home can seem overwhelming. However, down payment assistance is available for first time homebuyers. According to the United States Department of Housing and Urban Development, you are a first time homebuyer if you have not owned or occupied a home in the past three years and you are purchasing the home as a primary residence. Down payment assistance for first time homebuyers may be available through your state and the federal government.
Many states are offering down payment assistance to encourage first time homebuyers to purchase a home. For example, the California Housing Finance Agency offers a deferred-payment junior loan of up to 3% of the purchase price, to qualified first time homebuyers that can be put toward a down payment. California’s assistance program requires a contribution of at least one percent from the buyer and the buyer must meet income requirements to be eligible for down payment assistance.
The United States Department of Housing and Urban Development, HUD, offers the Mortgage Insurance program to assist new homebuyers with a down payment toward a home. The homebuyer must first meet standard Fair Housing Association, or FHA, credit qualifications. The mortgage insurance program allows the borrower to finance 96.5 % of the purchase of a home, and put as little as 3.5% toward the downpayment. The loan is insured by HUD, and the mortgage loan is funded by a mortgage company, or bank. Additionally, the down payment can come from anywhere including a family member, an employer or a charitable organization.
If you live in public housing, you may qualify for a homeownership voucher. Not all areas are participating in this program so contact your local Public Housing Agency, PHA, to see if vouchers are available in your area. The vouchers let you use the money that you are currently using as a subsidy to help your family with rent, to instead go toward the purchase of a home. Also, the homeownership option allows first-time homeowners to use voucher subsidy to meet monthly homeownership expenses. Introduction of the down payment assistance option has been delayed.
Speak with a licensed attorney about down payment assistance that is available to you. Only a licensed attorney can properly advise you about your legal options.