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Down Payment Assistance: How to Get Help Buying Your First Home

Mom w childIf you're like many first-time buyers, saving up the chunk of money you’ll need to buy a home can be a real challenge.

 

But if you've got a good job, steady income, and decent credit, and the only thing holding you back is a lack of cash on hand for the down payment, you'll be happy to know that all across the country, local and state agencies offer grants and low-interest loans to help first-time buyers achieve homeownership.

 

Known as down payment assistance programs (DPAs), these resources could provide the financial boost you need to buy a home months or even years before you could save all of the money on your own.

 

How do DPAs work?

 

Managed by state housing finance agencies or city and county governments, these programs give first-time buyers financial aid to help pay for a down payment and/or closing costs.  If you qualify, you can receive aid in a couple different ways:

  • Grants –Free money you never have to pay back
  • Loans - Typically paid along with your primary mortgage or when you sell or refinance the property

Some programs also forgive DPA loans after you’ve been in your house for a while, so you never have to pay back the total amount they lent you. In most cases, DPA loans have interest rates that are lower than your main mortgage, and in some cases, the loan is interest-free—so you pay back only what you borrowed and not a cent more.

Brian Hervey DPA 

How much can you get from a DPA?

That depends on many factors, including your income, the area where you want to buy, and the type of programs offered in your area. We’ll discuss income requirements in a minute, but if you qualify, you may be able to get anywhere from $5,000-$10,000, or even more. That means you can use your own money on other household expenses and get into your home that much sooner.

 

Can DPAs save you money in the long run?

Yes! While some loans require just 0-3% down, paying more upfront can really pay off. Remember, the larger your down payment is, the smaller your monthly payments will be, and that makes budgeting the rest of your life easier. Because you’re financing less, a larger down payment can save you thousands of dollars over the lifetime of your loan. And the sooner you buy, the sooner you can start paying off your mortgage and begin building equity in your home.

 

Who’s eligible for a DPA?

The programs are designed to help the people who need it most. Requirements vary from place to place, but if you’re applying for a DPA, you may need to:

  • Be a first-time homebuyer. In some places, you can qualify if you haven’t owned a home for a certain number of years.
  • Have a low to moderate household income. Not sure you qualify? Try googling the Area Median Income (AMI) where you live. If you make 50% or less of that amount, you’re considered low income, and 50-80% of the AMI is considered moderate income.
  • Plan to purchase your home within a specific area. While some DPAs apply to the entire state, others are targeted to areas that have been hard-hit economically and need to be revitalized. Once you’ve found a DPA in your area, check your zip code to see if the property you want to buy qualifies for assistance.
  • Use the money for a home that you'll live in. These programs are for primary residences only; rental properties and vacation homes typically don’t qualify.
  • Pay for part of the down payment yourself. The percentage you pay may vary by the type of loan and DPA program, but your loan officer can help you figure out how much you’ll need to supply.
  • Take a short homebuyer education class. This will prepare you for the financial responsibilities of owning a home to ensure that you buy a property you can afford and can continue to make your payments after you move in.

 Brad Chambliss DPA

 

 

What kind of mortgages work with a DPA?

If you’re considering a DPA, one of our Amerifirst loan officers will be happy to explain your options. These programs usually work with the most common mortgages, including FHA, VA, USDA Rural Development, and conventional loans.

 

How do you apply for a DPA?

We’ve put together a list of programs in each of the states where Amerifirst operates. Just scroll down to find your state and follow the links to see what’s available in your area. As always, if you want someone to help you understand these programs (even before you’re ready to buy), reach out to us at Amerifirst. We're always happy to help!

 

 

Down Payment Assistance Programs by State

 

ALABAMA

  • The Step Up program offers a 10-year second mortgage loan to cover your down payment. Some limitations apply, including an income cap, a credit score of at least 640, and using an FHA or conventional loan from Step Up’s preferred list.
  • Affordable Income Subsidy Grant provides eligible borrowers a grant to help with closing costs. Your qualifying income converted to an annual basis cannot exceed 80% of the Area Median Income for the property location.
  • The Freddie Mac Advantage Loan can be used for people whose income is over 80% of AMI but below $130,600. 

See HUD's list of alternative programs for Alabama.


 

CALIFORNIA

 

Read the full blog on California's home buying assistance programs on our Ameritrust website.

  • The MyHome Assistance Program can lend up to up to 3.5% of the home’s purchase price, or $11,000 — whichever is less--to first-time buyers within an income cap.
  • The CalHFA Conventional program is a 30-year fixed interest conventional mortgage that gives you the option to roll in down payment and closing cost assistance into your mortgage.
  • The CalPLUS Conventional program comes with a slightly higher 30-year fixed interest rate, but you can combine it with the MyHome Assistance program for down payment help and the CalHFA Zero Interest Program (ZIP) for closing costs. The ZIP program doesn’t charge borrowers interest on the money it lends through the program.

See HUD’s list of alternative programs for California.

 

FLORIDA

 

The Florida Finance Housing Corporation offers three ways to help:

  • Eligible buyers can get a grant (which never has to be paid back) for 3% of the home’s purchase price.
  • The Florida Assist Program offers a $7,500 second mortgage with no interest and no monthly payments. Repayment is due only when you sell or refinance the home.
  • With the Hardest Hit Fund DPA, residents of certain counties may get a loan up to $15,000 interest-free for five years. Because 20% of the loan is forgiven each year, you pay nothing if you stay in the house for five years.

See HUD’s list of alternative programs for Florida.

Blog_Down-Payment-Assistance-Program-01 (002)

GEORGIA

Home buyers who meet household earning caps and home purchase prices may qualify for the following aid from Georgia Dream Homeownership Program:

  • First-time buyers can get $5,000 after they contribute $1,000 toward their own down payment.
  • Home buyers with a qualifying disability or a job in certain occupations can receive $7,500.
  • Buyers who are eligible under the first-come-first-served Hardest Hit Fund may receive $15,000.
See HUD’s list of other DPA programs in Georgia.


ILLINOIS

  • The Illinois Housing Development Authority offers first-time buyers a non-repayable grant up to $7,500 when buying a home in Boone, Cook, DeKalb, Fulton, Kane, Marion, McHenry, St. Clair, Will or Winnebago counties through the 1st Home Illinois program. Buyers must put down $1,000 or 1% of the purchase price (whichever is greater) and be buying an existing home.
See HUD’s list of alternative programs in Illinois.


INDIANA

The Indiana Housing and Community Development Authority provides two grant programs that provide of up to 3.5% of the home’s appraised value or purchase price.

  • Next Home (NH) is open to those who already own a home, have a minimum credit score of 640-660, and fall within income limits.  
See HUD’s list of other programs in Indiana.

 

KENTUCKY

The Kentucky Housing Corporation has two assistance programs:

  • With Regular DPA, you can borrow up to $6,000 over 10 years with 5.5% interest.
  • With Affordable DPA, you can borrow up to $6,000 over 10 years with 1.0% interest if you meet income limitations.
See HUD’s list of alternative assistance programs in Kentucky.


MICHIGAN

The  Michigan State Housing Development Authority has two programs that offer interest-free loans with no monthly payments. They only fall due when you refinance, finish paying down your mortgage, or sell the home:

  • MI Home Loan is for first time buyers and those purchasing in target areas who have a minimum credit score of 640 or 660 and meet certain income and home purchase price limits. It offers $7,500 statewide and $10,000 in certain areas.
  • MI Home Flex offers $7,500 in assistance and is open to any buyer who falls within income and home purchase price limits and has a minimum credit score of 660.
Find other programs in Michigan on HUD’s website.


Steve Carthwright DPAMINNESOTA

The Minnesota Housing Finance Agency offers two assistance programs for eligible borrowers:

  • With the Monthly Payment Loan, you can borrow up to $17,000 at the same rate of your first mortgage and pay it down over 10 years.
  • The Deferred Payment Loan lets first-time buyers borrow $10,000-$13,000 interest-free, with no payments until you pay off, refinance, or sell the home.
See HUD’s list of other homeownership assistance programs in Minnesota.

 

NORTH CAROLINA

  • The NC Home Advantage Mortgage provides loans of up to 5% of your opening mortgage balance. The loans start to be forgiven in year 11 of your mortgage and are fully forgiven by year 15 but must be repaid in full if you sell, transfer or refinance before year 11.
  • The agency also provides an $8,000 down payment assistance option for first-time buyers and military veterans who meet additional criteria.
See HUD’s list of other homeownership assistance programs in North Carolina.


OHIO

  • The Ohio Housing Finance Agency offers a loan that provides either 2.5% or 5.0% of the home’s purchase price for buyers with a credit score of 660 or better and certain income and purchase price limits. The loan is forgiven after seven years but must be repaid in full if you sell, transfer or refinance before then.
See HUD’s list of other assistance programs in Ohio.


PENNSYLVANIA

  • PA Housing Finance Agency offers the HOMEstead program, which provides up to $10,000 to qualified borrowers within certain income and purchase price limits. This zero-interest loan is forgiven at a rate of 20% each year over five years, but must be repaid in full if you sell, transfer or refinance before then.
See HUD’s list of other assistance programs in Pennsylvania.

 


SOUTH CAROLINA

  • SC Housing has a first-time buyer program for low-to-moderate income families and individuals who are purchasing a home for the first time. It may pay all or part of your required down payment if you use a participating lender.
See HUD's list of other assistance programs in South Carolina.


TENNESSEE

Tennessee Housing Development Agency has two down payment assistance programs:

  • Great Choice Plus offers loans up to $7,500, with a 15-year repayment plan and the same interest as your first loan.
See HUD's list of other assistance programs in Tennessee.


WISCONSIN

  • The Wisconsin Housing and Economic Development Authority offers the Capital Access Advantage program, an interest-free loan for up to $3,500 toward your down payment and closing costs. The loan only falls due only after you pay off, refinance, or move, and there are no monthly payments.
  • Housing Resources, Inc. has a list of other resources for Wisconsin homebuyers, including grants and/or forgiveable loans for purchasing a home in certain areas.
See HUD's list of other assistance programs in Wisconsin.

 

Read our blog: Using gift funds for your down payment

 

Other first-time homebuyer resources

At Amerifirst, we've got lots of great resources for first-time homebuyers. Want to learn more? Visit our First Time Homebuyer webpage or click the button below to connect with one of our experienced loan officers. You may be closer than you think!

 

Let's Talk!

 
Not all borrowers will qualify. The above information is for informational purposes only and is not intended as an advertisement or a commitment to lend. The programs listed are offered through the aforementioned government agencies and may end without notice at their discretion.
 

Alabama, Georgia, Minnesota, and Pennsylvania do not have State Programs available

 

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