Everything You Need to Know About the Down Payment Assistance Program
What is a down payment assistance program?
Down payment assistance program to purchase homes in Texas is a program that provides incentives or low-interest loans to homebuyers to help them save for a down payment. There are over 2,000 of these services in the United States. Many of them are managed by state, county, or city governments. DPA services vary by location, but if you apply, you could receive thousands of dollars in down payment assistance.
Types of down payment assistance program:
DPAs are divided into four categories:
- Grants are simply unrestricted gifts that do not have to be repaid.
- Loans (second mortgages) that must be paid off in addition to the primary mortgage.
- Loans (second mortgages) with deferred payments that must be paid only when you transfer, sell, or refinance your home.
- Loans (second mortgages) that are forgiven for a fixed period of time (usually five years, but up to 15 or 20 years) and only have to be repaid if you transfer, sell, or refinance your home.
Some DPA loans are interest-free, while others have lower rates than your first mortgage and need the same or a higher rate.
The majority of down payment assistance program services are designed for first-time home buyers. A repeat home buyer, on the other hand, is also considered a “first-time buyer” if they haven’t owned a home in the previous three years. Other criteria can include income limits and the purchase of a home in a designated location.
Every programme for down payment assistance is a little different. The specific qualifications for eligibility can vary depending on where you live and what services are available.
However, many of them follow the same rules, such as:
- Only available to first-time home buyers.
- Buyers are often required to be low- to moderate-income.
- The buyer intends to live in the house full-time.
- The house is located in a census tract that has been designated as “targeted.”
- The DPA is used in combination with a mortgage programme that has been approved.
What mortgages can be used with the down payment assistance program?
Almost all DPA services demand that you borrow from a pre-approved lender and participate in a pre-approved mortgage program. You may be required to sign up for a specific mortgage product.
DPA-approved mortgages, on the other hand, often include the most common loan programmes, such as:
- FHA (Federal Housing Administration) loans are backed by the federal government.
- Loans from the Veterans Administration (backed by the Department of Veterans Affairs)
- Loans from the USDA (backed by the U.S. Department of Agriculture)
To put it another way, the mortgage products available through your DPA programme can be very versatile.
For any further information on down payment assistance programs to purchase homes in Texas, contant a professional.