See if You Qualify For a Financial Assistance
Buying a new home is always an exciting time, especially if it’s your first home. It means having your own space and investing your money in your own property rather than paying rent to someone else. However, many first time home buyers have a hard time scraping together the cash they’ll need for a downpayment and closing costs; it’s often the most money they’ve ever had to pull together at once.
What’s more, a lot of first time home buyers simply don’t know how much they’ll need for a down payment. According to housing market research firm Zelman and Associates, more than one in three first time buyers thought they had to put down at least 15% of their home’s purchase price, and most buyers thought they had to put down more than 10%. In reality, 15% is great, but it’s not completely necessary. In fact, buyers who take out an FHA loan need to put down just 3.5% — significantly less than what many people think!
Another thing about which many first time buyers may be uninformed is the wealth of financial assistance and other homeownership programs available to them. According to Down Payment Resource CEO Rob Chrane, roughly 70% of all homes for sale qualify for one of these programs! Are you eligible for financial assistance to help you buy your home? What types of assistance are available, anyway? Read on to find out.
Do You Qualify?
The first step to knowing if you qualify for assistance in determining if you’re a first-time buyer. This is not as cut and dry as you might think, because even if you’ve owned a home before, you may still qualify as a first-time buyer under the official definition by HUD, or the US Department of Housing and Urban Development. The government agency considers anyone who has not owned a primary residence in the past three years a first-time buyer, so even if you’ve technically owned a home in the past, you may still be eligible as a first-time buyer.
Additionally, most financial assistance programs have income requirements to qualify for downpayment and other financial assistance, though the exact number varies from one program to the next. It’s always a wise idea to look into the various programs in your state (and even your city) to see if you’re eligible. It’s important to point out that these programs are not always exclusively for home buyers with a low income, plus most programs have a maximum sale price (though again, as with income requirements, this number may be higher than you might think). There are asset maximums with most assistance programs, and these are relatively low, usually no more than $20,000. That’s because these types of programs help buyers with their down payment.
You’ll also want to see if your occupation qualifies you for home buying assistance; health care workers, teachers, and police officers are among the careers that are often helped by one of these programs. No matter which program you qualify for, though, you will probably need to attend a course on homeownership that’s approved by HUD. And of course, you’ll need to qualify for a home loan, which means you’ll need a reasonably good credit score. Finally, most down payment assistance programs do require buyers to contribute some, such as $1000 or 1% of the sale price, just so the buyer has a vested, financial interest in the purchase.
It may require some legwork to see if you can get some assistance in putting together a down payment for your new home, but if you’re able to get some money out of it, the effort will be highly worthwhile.
What Programs Are Out There?
There are many different programs out there offering money to home buyers. First, are programs that help with down payment and closing costs. If you’re interested in one of these, it’s crucial to do your research before applying and especially before accepting money, as many of these types of programs require you to pay back what they give you if you sell your house within a short period of time (usually five years, though sometimes ten). These types of programs seek to get homeowners in primary residences for the long term rather than giving free money to house flippers, so you’ll want to make sure you read the fine print.
There are also lower interest loans, which are helpful for keeping your mortgage payments down to an affordable level. If you have good credit and buy in a designated area, you may qualify for one of these loans. Be aware, however, that they tend to be more localized, so you’ll want to look into what your state offers, as well as any available county and city homeownership incentives as well.
Additionally, if you’re buying a new home in a brand new community, you may be surprised to learn that you could qualify for some type of financial assistance. These are often from the community’s builder or developer as an incentive for first-time buyers to buy one of their homes instead of an existing home.
Finally, your realtor may be familiar with some of the programs in your area and may be able to refer you to their representatives. A good place to get started is to look at all the programs listed on Downpaymentresoure.com. The key takeaway from all of this, of course, is ask and ye shall receive. Do your homework and find out what’s available, then apply to programs that seem like a good fit. You may not think you qualify for financial assistance, for whatever reasons, but many home buyers are eligible to receive some sort of help with the purchase of their new home.