Opting for Down Payment Assistance to Purchase Homes in Texas: 2 Things to Remember
When you are determined to purchase a house but running low on the cash front, the down payment assistance program is a boon. The thumb rule for putting a down payment is 20%; however, this turns out to be difficult for many first-time homebuyers. At such an hour of challenge, a down payment assistance program makes the whole process more affordable only if you pass the eligibility test.
To put it simply, the down payment assistance program offers the much-needed financial help to the future homeowners who do not have enough money at this time. Down payment grants, tax credits, and second mortgage loans – these are three types of assistance available, and some of the programs are only restricted to the first-timers. In some cases, down payment assistance to purchase homes in Texas can be availed for the people who never owned a property before or in the past three years. Therefore, who can opt for the program is broadly dependent on the lenders. If you are interested in understanding how the DPA (down payment assistance) works, take a look below.
How does a down payment assistance program work?
Administered by a state or local housing authority, the lenders can only offer the program to qualifying borrowers. By using the sum, the homebuyers can pay for closing costs and take care of down payment. The money received through the assistance program is a type of financial aid that can be one of these 3 things – an interest-free mortgage, a debt to pay off within a deadline, and a grant. Generally, the borrowers live in the new house and make it their principal residence for a particular period to avoid paying off the amount. When the down payment assistance becomes one type of mortgage, you are asked to pay the entire amount even if you sold the house or paid the mortgage payments.
Can anyone get down payment assistance?
The majority of the down payment assistance programs are only available for first-time buyers; however, only a few are available to ones applying for a second house. As earlier said, individuals who have not purchased a residence in the last 3 years can apply for the program. Now, the lenders decide whether certain groups of police officers, city employees, emergency buyers, and teachers can opt for the program. Before applying, you should meet the income requirements which are ideal for moderate- or low-income buyers. The location needs to be approved beforehand, too. Also, you need to choose a house that does not fall into the category of the maximum home price in that area.
When your credit is not in the best shape, the down payment assistance can fulfill your life-long dream. If you work with a private lender, the onerous task can light to a great extent. Of course, the lender can show you an avenue to reach a decent score-mark. Be wary of the late payments and the outstanding balance can pull your scores down. If there are other queries about credit scores and down payment assistance, you should find a perfect lender!
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.