Down Payment News and Programs

• Author: Noah Koch
• Posted: 2024-05-02

Buying a home is one of the biggest challenges, and the most difficult part is the down payment. As housing prices continue to increase, many Americans struggle to come up with the necessary funds to secure a house.

Down payments can be an obstacle but programs exist to help first-time homebuyers address this issue. Read more to find out about down payment assistance programs.

 

Down Payment News and Assistance

According to one Urban Institute report, around 68% of renters find coming up with a down payment as the largest barrier to owning a home. In some states, coming up with a down payment is more difficult than in others.

For example, only about 34% of first-time buyers can buy a home in California. New York, New Jersey, and Massachusetts face similar situations, with potential buyers facing larger comparative hurdles to buying a home.

However, the housing market is less competitive this year, and buyers are having offers approved while putting less money down to secure a home. In the past months, the average down payment has fallen to about 13% of the sale price of a home.

Given the challenges of buying a home and the potential opportunity offered this year, down payment assistance programs can help. For first-time home buyers, these programs help cover the expense of a down payment on a home through loans and grants.

A down payment is the money that buyers pay upfront to secure a home and is usually a percentage of the purchase price of the property. Down payments can range from 3% to 20% and are typically determined by the type of mortgage loan that is secured.

To be eligible for a down payment program usually requires not having owned a home in the past 3 years, or owned other types of property. Down payment assistance usually comes in the form of low-interest or deferred-payment loans but grants and forgivable loans, where you don’t have to pay the money back, are also possible.

Down payment programs are provided by several organizations, including the U.S. Department of Housing and Urban Development (HUD).

 

Down Payment Programs

Fortunately, first-time home buyers have programs they can turn to for help with securing a down payment and buying a home. HUD provides one of the main ones.

HUD works with states to provide funding for home buying and down payment programs. The Federal Housing Authority (FHA), which is part of HUD, provides insured loans through state and local banks and can help secure low down payments and down payment loans.

The National Homebuyers Fund (NHF) is a non-profit corporation that targets the problem of affordable housing, or lack thereof, too. Established in 2002, the NHF offers down payment assistance that goes up to 5% of the mortgage amount and is available in most states. You do not have to be a first-time buyer to qualify for the NHF program, and they offer flexible debt-to-income requirements.

The NHF has provided almost $400 million in down payment assistance and helped over 46,000 families and individuals buy a home. This corporation has helped low to middle-income families overcome the burden of securing a down payment.

Each state has a home-buying assistance program that can also help with down payments. For example, California has the Housing Finance Agency, or Cal HFA, that provides down payment assistance for low to middle-income first-time home buyers.

Cal HFA specifies that the upper-income limit is $211,000 to qualify. This program also recently provided a “Dream for All” loan assistance program that distributed an extra $300 million to first-time home buyers for down payments. Reflecting the demand for this assistance, the funds were depleted in 11 days.

Minnesota Housing is another example of a state-based homeownership program that provides down payment support. Upon qualifying for a loan with this program, applicants can access down payment loans that range from $16,500 to $18,000 with either full repayment at the end of the mortgage term or 10-year repayment plans.

Kansas Housing likewise offers first-time home buyer help with its down payment assistance program. This program works with lenders in the state to secure 0% interest loans of 15% to 20% of the home price. If the buyer remains in the home for 10 years, the loan is forgiven.

 

Down Payments

Securing a down payment is the most challenging part of buying a home. Yet, this year may provide a window of opportunity, and down payment programs can help address that problem. Visit YourHousingSupport to learn more about down payment news, assistance, and programs.