Down payment assistance programs are a wonderful way to make home ownership more affordable. As of this writing in late 2024, Florida has many such programs to choose from. Some offer as much as $50,000 in down payment and closing cost assistance.
Yet as with anything in life, there are both advantages and disadvantages to using these programs. You should know what you’re likely to be getting yourself into before deciding you’re going to rely on down payment assistance loans or grants to buy your next home.
Here are the major pros and cons so that you can make an informed decision.
See also: How to Save for a Down Payment
Pro: Homeownership Becomes More Attainable
Affordable homeownership is one of the largest and most obvious benefits of down payment assistance programs.
When you don’t have to save for a large down payment or closing costs, you only really need to start worrying about two things. The first is whether you can afford the monthly down payment. The second is whether you have a large enough reserve built up to handle inevitable (and expensive) home maintenance needs.
For over half of Americans, the down payment is the major hurdle between themselves and home ownership. The right program can help you clear this hurdle.
See also: Your 2024 Roadmap to Buying Your First Home
Pro: There Are Plenty of Programs to Choose From
If you don’t qualify for one program, chances are another may work for you.
Which is good, because you may not get approved for the first program you try even if you meet all the requirements. For example, some down payment assistance funds run out of money, and are unable to help everyone who might want or need their help.
In some cases, you can mix and match programs. For example, some people take advantage of both down payment assistance loans and grants.
If you can afford your house payment, have a credit score of 620+, make less than the average program income threshold and are willing to take a homebuyer education course, there’s a good chance there’s a good program waiting for you right now.
See also: Maximize Your FHA Loan: Down Payment Help in Florida
Con: Your Purchase Options May be Limited
When you take advantage of a down payment assistance program you often lose the ability to choose whatever home you want.
Some programs require you to purchase a home within a certain county, city, or designated zone. The HomeReady program requires you to purchase a HomePath property, which is a property Fannie Mae has foreclosed upon and is now reselling. Many programs limit the purchase price of the home, which means you might not be able to buy the home size or style you prefer.
For many aspiring homeowners these are small sacrifices to make. Nevertheless, it’s worth knowing your home search will be constrained by the boundaries inherent to your program should you decide to take advantage of one.
Con: You May Lose the Flexibility to Sell and Move
Many down payment assistance programs exist to incentivize community building and revitalization.
This means they tend to want homebuyers to remain in the home once they’ve bought it. Some programs demand you stay in the home for five, seven, ten, or fifteen years. Some require an even longer tenure.
If you know you’re shopping for a forever home this shouldn’t be a problem. However, it also means you’ll face penalties if you have to move for career reasons. Or that space could get tight if your family grows and expands beyond the home size you’re in.
Those who take advantage of down payment assistance programs should thus shop very carefully to ensure the home they end up in is a home they’ll be happy staying in for many years to come.
Do you have questions about down payment assistance programs in Florida?
Alex Doce can help you decide whether a down payment assistance program is the right move for you, and which programs might be the best choice given your financial goals, homeownership goals, and unique circumstances. To see what Alex’s clients say about working with him, goto his reviews page.
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