Many down payment assistance programs offer down payment loans to help homebuyers defray the difficulties associated with saving up for a large down payment.
There are multiple programs both here in Florida and throughout the United States that address different circumstances, communities, and situations.
Some of these programs will even help you with your closing costs, which can make homeownership even more affordable.
See also: The Complete Guide to Closing Costs for Homebuyers
Wondering if one of these programs might help you attain your dreams of homeownership? Here’s everything you need to know about these exciting programs.
See also: Specialized Mortgage Options That Can Benefit Home Buyers
What types of down payment loans can I apply for?
Three types of down payment assistance loans exist.
The first type is a zero-interest, forgivable second mortgage loan. As long as you continue to own and live in that home for an agreed-upon period of time, you don’t have to repay the loan and this loan is forgiven when that period of time is up.
How long will you have to stay? Some loans require you to stay in the home for as little as 5 years, whereas others require you to remain in the home for 20 years or even longer.
Zero-interest, deferred payments loans will have to be paid back eventually, but not until the home is sold, the mortgage is refinanced, or the mortgage is paid off in full.
Finally, low interest loans are repaid like any other loan, serving as a second mortgage on your home.
Down payment assistance grants are different from loans. These do not have to be paid back. Sometimes you can combine a down payment assistance grant with a loan to purchase a larger property.
How do you get a down payment loan?
You’ll usually have to apply through a specific loan program, and may need to attain your primary mortgage through participating lenders. Every down payment assistance loan program is a little different.
Some down payment loans are only available to certain people, like police officers or active duty members of the military. Others are location-based, requiring you to purchase your home in a specific town, county, or designated zone. Some require your income to remain under a certain threshold. Many will require you to take a homeowner’s education course before you can receive the loan.
Like most loans, down payment assistance loans will generally require you to have a minimum credit score, which can vary depending on the program you’re applying through.
Do you have to pay back a down payment loan?
Sometimes. It depends on the type of down payment assistance loan you receive. Some loan programs forgive the loan after you meet certain conditions, such as remaining in the home long enough.
Check the terms and conditions of your specific program so you understand your rights, responsibilities, and obligations.
Most borrowers find their down payment assistance loan to be a low-risk, high-reward financial decision, so long as they’re willing and able to abide by the terms and conditions of the loan.
See also: 2024 FHA Loan Limits: New Guidelines and Eligibility Requirements
Need help qualifying for a down payment loan?
Alex Doce can help you evaluate currently available programs, and can help you determine which program fits your unique circumstances and needs. To see what Alex’s clients say about working with him, go to his reviews page.
Are you ready to find the home of your dreams? Schedule your free consultation with Alex today.
