Saving up for a down payment on a house can be a significant challenge for many individuals and families. The common misconception that a 20% down payment is required often makes the goal seem more daunting than it needs to be. According to Lending tree, 31% of Americans still believe they need to save that much. However, recent data shows that the average down payment for a house in 2023 was 14.4%, significantly lower than what many people believe. Down payments can even be as low as 3.5%
To make the process even more accessible, there are over 2,000 Down Payment Assistance (DPA) programs nationwide. These programs offer loans and grants that can be used to cover a portion of the down payment and closing costs when purchasing a home. While the amounts vary, they can range from a few thousand to tens of thousands of dollars.
Here are the four main types of assistance available through DPA programs:
- Grants: These do not require repayment.
- Loans: Borrowers pay back a portion each month in addition to their mortgage payments.
- Deferred loans: Repayment is only required if the house is sold or the mortgage is refinanced.
- Forgivable loans: Repayment is not necessary if the borrower lives in the house for a specified period.
It’s important to note that each program has specific qualifications and criteria, so potential homebuyers need to meet these requirements. The application and approval process for DPA programs may add some time to the overall homebuying process, and there may be limitations on the amount you can spend on a house or where you can purchase. However, the benefits of using these programs include quicker entry into homeownership, potential savings of months or years of down payment accumulation, and the opportunity to build equity sooner.
To explore available programs, reach out to me and/or a local mortgage advisors (I like Michael and Brogan because they have the hearts of a teacher and are very one-on-one). While the effort involved in researching and applying for these programs may take some time, the potential benefits make it a worthwhile endeavor for those seeking to make homeownership more accessible.
In summary, understanding that a lower down payment is often sufficient for purchasing a home and exploring the numerous Down Payment Assistance programs available can significantly expedite the homebuying process and make homeownership a reality for many who might otherwise face challenges in saving up for a down payment. The more you put down, the lower your payment will be, however. Let’s talk about how to get you HOME.