Down Payment Assistance Home Loan Programs

One of the most important financial decisions you will ever make in your life will be your mortgage plan without a doubt. Naturally, you want to wind up with a home that meets your family’s needs, but you don’t want to wind up in over your head either. Sometimes you may even find that for whatever reason, you’re not eligible for a traditional mortgage. That’s where special programs like Down Payment Assistance Home Loan Programs (DAPS) can help!

DAPS are loan programs that were put in place especially to help people who are looking to buy a home for the first time, but need a leg up when it comes to meeting the requirements associated with being approved for a home loan. These include coming up with the down payment and dealing with some of the closing costs required by the FHA loan program.

DAPS assistance programs are typically broken down into two distinct types: 501 non-profit down payment programs and assistance programs backed by the state, county, or city. Let’s take a look at each type individually.

501 Non-Profit Down Payment Assistance Programs

• Under normal circumstances, this type will require the cooperation of the person or establishment selling the home in order for the applicant to be able to qualify and take advantage of it.
• Most don’t come attached to a set repayment schedule or require the establishment of a second mortgage.
• Some notable examples of this sort of program include Neighborhood Gold, which can grant applicants up to 20% of their initial down payment and comes with mortgage protection; HART, which is capable of granting applicants up to $15,000 toward a down payment and/or closing costs; Nehemiah, which can grant applicants up to 3% of their initial down payment.

State, County, or City-Backed Down Payment Assistance Programs

• Typically these are secured by way of a second mortgage.
• The second mortgage in question could possibly be what is known as a silent mortgage. A silent mortgage doesn’t require payments right off the bat and sometimes such loans are simply forgiven after an applicant lives in the home for a span of 10-20 years or so.
• Some well-known examples of this program type are CHDAP, which grants up to 3% of the down payment; Access 2000, a no money down program specific to California; and CHFA, another localized California program that can under some circumstances provide up to 100% financing.

It is important to note, however, that whether you’re looking into Down Payment Assistance Programs of either type, both operate under a FHA loan. Applicants must be able to obtain FHA financing in order to take advantage.

• This means they must have been gainfully employed for 2 years.
• Credit score must be a minimum of 620. However, sometimes applicants who do not yet have a credit score will be considered.
• Bankruptcies on applicant’s record must be at least 2 years old and foreclosures must be 3 years old.
• Payments on your mortgage should not exceed 30% of your income before taxes.

Overall, these down payment programs are a godsend to those who want to make their dreams of a home come true but just need a little extra assistance. Why not see what they can do for you?