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First-time homebuyer grants and down payment assistance

With homebuyer grants and down payment assistance (DPA) programs, you could be a homeowner sooner than you think. Widely available through state and local government agencies and nonprofit organizations, DPAs can potentially save you thousands of dollars by reducing the amount you need to save for a down payment. First-time homebuyer assistance eligibility is usually based on income.

Do I have to repay the down payment assistance seconds and grants?

Down payment assistance is provided as a loan or grant.

  • Down payment assistance programs

    Widely available DPA programs are designed for homebuyers who can afford monthly mortgage payments but don’t have enough for a down payment. They’re available at the state or local government level or from other organizations that offer first-time homebuyers relief from the initial cost of purchasing a home. DPA removes this common roadblock for lots of first-time homebuyers. As a result, you can start the journey to homeownership without waiting to save. Some DPA programs may also offer funds to cover some closing costs. If the assistance is provided in the form of a grant, it’s often forgiven over time, so you don’t have to pay it back.

  • Zero Down payment loans

    A no down payment mortgage offers options to low-to-moderate income homebuyers with less than perfect credit scores. Guild’s Zero Down program pairs a standard FHA first mortgage for up to 96.5% of the total purchase price plus second mortgage options to go toward down payment and closing costs. The second mortgage provides down payment assistance of 3.5-5% of the purchase price. Second liens may have to be repaid, or they could be forgiven after a certain period of time of owning and living in your home as your primary residence.

What kind of down payment assistance is available?

According to The Mortgage Reports, there are more than 2,000 down payment assistance programs nationwide. The programs available can come in the form of Housing and Urban Development (HUD) programs, homebuyer grants, closing cost assistance and the following government-backed loans.

  • FHA loans

    FHA, FNMA HomeReady and FHLMC Home Possible mortgages are designed for low-to-moderate income borrowers with less than perfect credit and limited cash for a down payment.

  • USDA loans

    USDA loans are for low-to-moderate income homebuyers and offer 100% financing in rural areas. Also known as the USDA Rural Development Guaranteed Housing Loan Program, this type of loan is available in many suburban areas as well.

  • VA loans

    VA loans provide zero-down payment options to eligible members of the U.S. military and surviving spouses. These government-insured loans remove many of the typical up-front and ongoing costs of mortgages. In addition, they don’t require private mortgage insurance (PMI).

First-time homebuyer qualifications

Depending on your local housing agency’s requirements, even if you’ve previously owned a home, you may still qualify as a first-time homebuyer. For example, if you haven’t owned a home in three years, you’re a divorced or separated parent or your property was damaged, you may still qualify. Learn more about first-time homebuyer qualifications.

Will my credit score affect how much down payment assistance I can get?

Potentially, yes. In addition to evaluating your debt-to-income ratio, assistance programs may require a minimum credit score.

How to apply for first-time homebuyer grants and down payment assistance

Every state has a state housing finance agency (HFA) to help meet the affordable housing needs of the residents of their states. Visit your state’s housing finance agency website to see if help is available and how to apply. Find a state housing finance agency. Since every program is different, you’ll get a better understanding of requirements and eligibility by asking the following questions before you apply:

  • Is a homebuyer education course required?
  • Is the program only open to first-time homebuyers?
  • How long do I have to stay in my home?
  • What are the income qualifications?

At Guild, we work with organizations across the nation to offer down payment assistance programs that help you become a homeowner sooner. So start your journey to homeownership now.

The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply.

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About the Author: Guild Mortgage

Founded in 1960 when the modern U.S. mortgage industry was just forming, Guild Mortgage Company is a nationally recognized independent mortgage lender providing residential mortgage products and local in-house origination and servicing. Guild’s collaborative culture and commitment to diversity and inclusion enable it to deliver a personalized experience for each customer. With more than 4,000 employees and over 250 retail branches, Guild has relationships with credit unions, community banks, and other financial institutions and services loans in 49 states and the District of Columbia. Guild’s highly trained loan professionals are experienced in government-sponsored programs such as FHA, VA, USDA, down payment assistance programs and other specialized loan programs. Guild Mortgage Company is a wholly owned subsidiary of Guild Holdings Company, whose shares of Class A common stock trade on the New York Stock Exchange under the symbol GHLD.