Common Sources of Down Payment Assistance for First-Time Home Buyers

a houseThe primary obstacle to homeownership for most first-time buyers is down payment. Most lenders require at least 3.5% of your mortgage as down payment. Since most of these home buyers are just starting on their first jobs, getting a substantial monetary amount for their down payment proves challenging.

To ease this, there are several down payment assistance programs in Ogden designed for first-time home buyers. These come in the form of grants, subsidized financing programs, and forgivable loans. Here are the three leading sources of assistance:

State Housing Finance Authorities

Depending on your state, there are various programs you can access through a local mortgage lender for assistance with your down payment. State housing finance authorities will advance a subordinated lien, which you will repay once you have paid off your home loan. The loan has no interest accrued and some states completely forgive the loan after a certain period.

Matched Savings Accounts

This is also a state program that’s sometimes called the individual development accounts program. You’re required to save a certain amount for six to 18 months. After this period, you state will match up the saved amount by a certain percentage. Your eligibility for a matched savings account is usually based on your current local median income and property prices.

Mortgage Lenders

Nowadays, some lenders have down payment assistance programs for their first-time buyers. These are often in the form of below market rate down payments and matching up their home buyers’ savings. They also now offer FHA and USDA mortgages, which require no down payments.

Lack of finances for your down payment is no longer a hindrance to your homeownership journey with the above sources of assistance. The exact rules of eligibility differ for these sources. For most, however, you should occupy the home you buy as your primary residence and complete a home buyer education counseling program.