Options for First-Time Homebuyers
September 3, 2021
Are you tired of renting, but unsure how to approach the home buying process? Do you get stressed thinking about how you will afford it? That is normal. The home buying process can be overwhelming. Mlend is here to make it as stress-free as possible. As a first-time homebuyer, there are several options available to you – from down payment assistance to government-backed loans.
Down Payment Assistance (DPA)
If you are a first-time homebuyer and unsure how you will be able to afford a large down payment, do not worry. There are both government and nonprofit organizations that offer down payment assistance through grants, loans, and other programs. They typically review credit history and income to determine qualification status. DPA grants are the most ideal form of financial assistance because they do not require repayment. Down payment assistance programs vary depending on where you live. A few nationwide DPA programs include:
- The Chenoa Fund, CBC Mortgage Agency
- Community Seconds, Fannie Mae
Visit the U.S. Department of Housing and Urban Development’s website to find a list of other home buying assistance programs in your state.
Matched Saving Programs
Individual Development Accounts (IDAs), also known as matched savings programs, offer another solution to first-time homebuyers seeking down payment assistance. These programs are often managed through a partnership between banks, government agencies, and nonprofits. Typically, homebuyers must deposit a certain amount of money into an IDA account before the organization will match the funds. The required deposit amount and the matching amount are set by the institution that holds the account.
The US Federal Housing Administration (FHA) often provides loans to individuals that are unable to afford a large down payment, as well as those with lower credit scores. HUD-approved housing counselors are available across the country to help you understand your options.
Closing costs are typically between 3-6 percent of the cost of the home loan. However, there are institutions like DAP that offer financial assistance with closing costs in the form of grants and loans. It is not uncommon to ask the seller to split the closing costs. Additionally, there are many organizations that offer first-time homebuyer classes. In fact, some financial assistance programs will require you to take courses before they release the funds to you. If you have any questions regarding the home buying process, please give us a call at 301-371-8850. We are here to make this stressful and exciting time in your life as easy as possible.