4 Types of Down Payment Assistance Available to Purchase Homes in Texas
Worried as you are finding it difficult to manage a down payment for a home loan program? Don’t worry! Down payment assistance programs are there to assist you. Offered by the country, state, or different organizations, these programs can cover a part of the down payment or the whole down payment.
Want to know about various programs before applying for down payment assistance to purchase homes in Texas? Here are the common ones –
- Forgivable Loans
These loans are second mortgages, which you won’t have to pay back as long as you stay in a home for a certain period. Generally, these loans come with an interest rate of 0%. Mortgage lenders will forgive them. It means homebuyers have to pay them back, after a set number of years. Often, lenders will forgive the loan after 5 years; however, they do have the option of not forgiving these loans for a longer period, even up to 15 to 20 years.
But if you move before the forgiveness period loans, then you have to repay these loans. For example, if your lender says it will forgive your loan after 5 years and you move, refinance your loan or sell your home in 4 years, you need to pay back a part of your forgivable loan or the whole loan. Generally, this second mortgage is large enough to cover the entire down payment amount.
- Deferred-Payment Loans
Another down payment assistance option for you! You don’t need to repay these second loans. And the amount is large enough to cover your down payment until you want to sell, move or refinance your first mortgage or pay down your first loan. Although these loans are never forgiven, you will need to repay if you leave your home ever. Usually, you will do this through the proceeds from selling your residence.
- Low-Interest Loans
Your lender or other organization may offer you the opportunity to take out a second mortgage loan at the same time your first mortgage is finalised. By using funds from this loan, you can cover your down payment. You will need to repay this loan each month, usually when you make your payments on your first loan. It means you will need to pay two mortgages each month.
- Matched Savings Programs
Matched savings programs, also called individual development accounts, are another way for homeowners to help pay for their down payments. With this program, homebuyers deposit money into an account with a bank, community organisation, or government agency. That institution agrees to match however much the buyer’s deposit. Then, home buyers can use the total amount of funds for covering their down payments.
So, check the eligibility for these programs and then apply for the one that will be suitable for you. Go and apply today!