- Many banks require a down payment to purchase a home.
- There are programs available to help people buy without a down payment.
- Homeowners might be required to carry special insurance afterward.
- Veterans have special programs that cater just to them.
Everything You Need To Know About Downpayment Assistance
(NewsReady.com) – Buying a home is the ultimate dream for many Americans. For some, however, it can be hard to save up for the down payment that’s often necessary to purchase that property.
Generally, someone in the market to buy a home should save at least 20% of the home’s purchase price. That means, if someone is looking to buy a home that costs $200,000 then they should set aside $40,000. That might seem completely unattainable for a working-class family, but that’s not true. There are programs to help.
First-Time Home Buyer
The government has a number of programs to help first-time homebuyers purchase a home. FHA loans are one of the most popular. The Federal Housing Administration insures the loan so the bank that the mortgage is through will give a new buyer lower closing costs, easier credit qualifications, and lower down payment requirements. For instance, they might only require a down payment of 3.5% of the home’s purchase price. So, instead of saving $40,000, a first-time homebuyer would only need to save $7,000 on a $200,000 loan.
A grant is a great way for a person to be able to afford a new home because they never have to pay that money back. People looking to buy for the first time should check with their bank, and organizations in their community and state that serve people in their specific situation.
Forgivable Mortgage Loans and Deferred Payment Loans
A forgivable mortgage loan is one that banks will forgive all or part of if the person agrees to stay in the home for a set number of years. However, if the person doesn’t meet the conditions of the loan, the bank may require it to be paid in full with interest.
Deferred payment loans often cover the down payment and all of the closing costs, but the bank defers payment on it, often until the person sells the home.
Match Savings Programs for Homebuyers
A matched savings account or Individual Development Account (IDA) programs are a way to provide incentives to low-income people who are trying to save money. A person will deposit money into an account and the organization offering the program will match the money.
If you are looking to purchase a home, speak to a real estate agent or bank about what options are available to you.
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