How to Avail Homebuyer Down Payment Assistance: A Comprehensive Guide
Aspiring homeowners often find that gathering sufficient cash for a down payment on a house can be a daunting task. However, there are resources available in the form of down payment assistance that can help ease this financial burden.
Down Payment Assistance Programs (DPAs) are programs that can provide financial aid to prospective homebuyers. These programs can present cash grants, as well as low-cost loans or even interest-free loans, to eligible applicants. DPAs are typically funded by government entities operating at both state and local levels, but similar programs can also be found in banks and credit unions.
Let’s delve deeper into the types of down payment assistance available and the qualification process, as reported by CNBC Select.
Varieties of Down Payment Assistance
Across the nation, there exist thousands of down payment assistance programs, many of which are designed specifically to support first-time homebuyers. These DPAs usually manifest in two main forms: grants and loans. The type of assistance you receive determines how you qualify for and repay the help.
Grants
For many homebuyers, grants are the most appealing form of down payment assistance. Essentially, grants are funds that you receive to help with your down payment and, crucially, do not need to be repaid. For instance, Iowa’s FirstHome program offers a grant of $2,500, intended to assist with down payment and closing costs. MaineHousing’s First Home Loan Program can provide up to $5,000, assuming the applicant meets the program’s specific requirements.
It’s important to note that grants aren’t only provided by government-funded programs. Some banking institutions also offer similar assistance. Bank of America, for example, provides qualifying borrowers in certain locations with a grant equal to up to 3% of the home purchase price, with a maximum of $10,000. This money can be used toward a down payment through their Down Payment Grant program.
Chase Bank offers a similar opportunity. Through their Chase Select Grant, available in eligible areas, you can receive $2,500 or $5,000. Initially, these funds are used to reduce your interest rate, with any leftover amount applied toward fees or your down payment.
