By Kat DeLong
You've worked hard and can finally afford a monthly mortgage payment - congratulations! Now, do you have enough saved for the down payment? Maybe you feel ready to buy a home, but everything in your neighborhood is out of your price range. Thoughts of saving for the down payment may keep you awake at night. But don't lose hope - let's find out where money exists to help you realize your dream.
Many government agencies offer help with the down payment for first-time homebuyers in the form of secondary loans made in conjunction with an FHA first mortgage. These loans are either repaid after the home is sold or forgiven after a specific period of time - usually five to 15 years.
Homebuyers must meet low-income requirements to qualify for these programs, and the amount of the assistance and the income level will vary by state. A list of agencies that offer down payment assistance is available from mortgage lenders.
Teachers, firefighters, police officers or emergency medical technicians can take advantage of the government's Good Neighbor Next Door Program, which offers an incentive to purchase homes in revitalization areas by offering a discount (up to 50%) on the price of the home. This is in the form of a "silent" second mortgage, forgiven once the requirements have been met. There are some limitations - buyers need to purchase one of the homes on their sales list and agree to live in the home for at least 36 months. Check with the offices of Housing and Urban Development for more information and a listing of properties for sale in the area.
Every state has specific programs that exist to help homebuyers. For example, the California Home Finance Agency runs a School Facility Fee Down Payment Assistance program that may refund the school facility fees homebuilders have paid for newly constructed homes. These refunds, in the form of a down payment, average over $5,000 per home.
Massachusetts has a program called Home of the Brave, which provides affordable, no down-payment loans for U.S. Armed Forces veterans, active duty personnel not called overseas and spouses of soldiers, sailors or marines killed while on active duty . The HUD website has a list of these grant programs by state.
These were popular programs that worked with the home seller to essentially give the borrower the down payment through a nonprofit third party. Unfortunately, the Housing and Economic Recovery Act of 2008 has effectively frozen these programs, although there is pending legislation to reform this act and reinstate the programs, so it is worth keeping an eye on the Housing and Urban Development website for updates. Websites such as AmeriDream and Nehemiah are still up and running.
Home prices are down and mortgage rates are low - even in these tough economic times. Help is out there if you know where to look.