Your inability to make the required down payment often comes in the way of getting approved for a mortgage loan. There are few down payment assistance programs available at the market place which help the homebuyers owning a home. Here it is to be noted that buying a home requires a lot of cash for making the down payment and for paying the closing costs & other expenses. Closing costs include expenses under different categories such as loan origination fees, title search, housing inspections, appraisal fees, survey fees, up front mortgage insurance, transfer taxes etc. Even for the FHA loans which require only 3.5% down payment, these expenses are quite burdensome for many home buyers.
A large number of mortgage down payment assistance programs are available for you. Most of these programs are offered by the non profit housing counseling agencies or the municipalities. This program offers you the chance to get assistance from 80% to 120% of the median income of your area. There is a widespread misconception that down payment assistance is available only for the low income people. But, this is not true. These programs are meant for all types of home buyers, irrespective of their income status. You don't have to toil much to avail such assistance. In fact, the homeowners are encouraged to have money in their savings account so as to meet emergency contingencies.
During the housing market boom, borrowers could avail down payment assistance program quite easily. Now, these programs are available to the borrowers who are eligible for a home mortgage loan with full documentation. Here we discuss about 2 important down payment assistance programs available in the country-
1. American Dream Down Payment Initiative (ADDI)
This is a government sponsored down payment assistance program available for the home buyers. The Department of Housing and Urban Development (HUD) is entrusted with this program. You can avail this program only if you opt for a Federal Housing Administration (FHA) loan. In addition to this, you have to be a first time home buyer so as to avail such assistance. Again, your income should not exceed 80% of median income of the area where you are purchasing the house, so as to get such down payment assistance. The down payment assistance that you receive under the American Dream Down Payment Initiative can't be more than 6% of the purchase price of the house.
2. State and Local Housing Development Authorities (HDAs)
Funds are supplied to the Housing Development Authorities (HDAs) at the local and the state levels, by the Federal Authority, for the down payment assistance program. The qualification criteria to avail this program vary according to states. However, to get approved for this program, you need not necessarily have to take out an FHA loan. There are some restrictions on the value of the loan and the income of the borrower so as to avail this assistance. In some situations, this down payment assistance is available in the form of grants, where you don't have to pay the amount back.