Down Payment Assistance is a Boon for 1st Time Home Buyers

1. DOWN PAYMENT ASSISTANCE IS A BOON FOR 1ST TIME HOME BUYERS

2. Did you know that you can get up to 97% of the cost of a home bankrolled through a mortgage program? Regardless, you are still expected to rise 3% of the final purchase price of the house. If you are in the lower or middle-income bracket, raising this 3% becomes a big hurdle—you can't always rely on your savings and investments or the assistance of relatives and friends. This is where down payment assistance provided through a government agency or private organization can help. These programs can give you a real helping hand and help you buy your first home with minimal hassle.

3. Down payment assistance programs, such as the State Housing Initiatives Program (SHIP), the Florida Bond Program, and the Neighborhood Stabilization Program (NSP), provide funding to first-time homebuyers—as much as $36,000 in state or county funds —that can be utilized to cover the upfront costs of buying their first home. These programs can be managed by various organizations, including your local or state housing authority or a nonprofit.

4. It is worth noting that first-time buyer down payment assistance programs has strict qualifying criteria, which is why working with an experienced and reputable local mortgage broker is essential. HOW DOES IT WORK? Down payment assistance programs may appear to be too good to be true for a first-time home buyer in desperate need of funds. However, these programs make for a very clever business proposition. This is how a first-time buyer down payment assistance program works:

5. The first step is the buyer looking for their dream home. Some down payment assistance organizations maintain a database of available homes for sale from which the buyer can choose to buy a new home. The buyer must also check with the lender—usually the Federal Housing Administration (FHA)—to get the mortgage pre-approved. If the seller agrees to engage in the down payment assistance program, they must make a tax-deductible donation to the organization instead of lowering the home's sale price. The organization then uses this donation to provide funding to the buyer. The seller can sell the house, the buyer can buy their new home, and the organization receives a chunk of the donation. It's a win-win situation for all parties involved. The reason for the third party involvement is because federal housing regulations disallow a seller from directly handing a buyer down payment money.

6. ADVANTAGES OF DOWN PAYMENT ASSISTANCE PROGRAMS Down payment assistance programs offer many advantages to both buyers and sellers. Though the buyer does not have enough money to put down, they can buy a new home, and the seller can attract more buyers to their home. The seller is also not required to reduce their home's sale price and normally receives a tax deduction that they can use to offset the capital gains tax they must pay on the sold property. This program benefits all parties involved. As previously stated, most down payment assistance programs have strict definitions for who qualifies as a first-time homebuyer, so consulting with a programming expert is essential. Make sure that you are dealing with a reliable, ethical local mortgage broker. Ask many questions and get the facts straight. Be well-informed. Once you are through with all these procedures, sit back and enjoy your very own home.