Down payment assistance available


Lew Sichelman

Washington lawmakers have earmarked billions of dollars in down payment assistance for first-time home buyers under the Build Back Better legislative package championed by President Joe Biden. But first-time buyers don’t have to wait for Congress to act — if it ever does.

Many financial aids are available to help buyers who are cash-strapped for a down payment and closing costs. Indeed, while much of the economy has come to a standstill during the pandemic, the state entities administering assistance programs have not stopped moving forward.

“All public housing finance agencies have remained open, and still are,” said Sean Moss of Down Payment Resource, an Atlanta-based company that tracks nearly 2,200 different programs that homebuyers can leverage to get financing. ‘aid.

Many buyers need a helping hand

These agencies not only stayed open, but in some cases set records.

“Business is booming,” said Lisa DeBrock of the Washington State Housing Finance Commission. “Our phones are ringing non-stop.”

The Florida Housing Finance Corporation saw its volume jump significantly last year; activity was so strong that it remained open 24 hours a day and increased its aid amounts. And the Arizona Industrial Development Authority has helped 750 buyers so far this year.

“I expect our volume to drop slightly next year – but I expected it to drop this year, and it hasn’t,” said Dirk Swift, executive director of AZIDA.

According to the latest figures from the National Association of Realtors, around 17% of first-time buyers receive some form of monetary assistance, mostly in the form of gifts or loans from parents, friends or other family members. After all, saving for a down payment remains the biggest hurdle for most buyers.

Less than 3%, according to NAR, generally receive support from other entities. If other recruits had researched these sources, perhaps many of them could have finally made it to the property ladder.

One problem is knowing what is available. A new pact between DPR and Zillow should go a long way to correcting this problem. The deal allows the popular real estate website – 2.7 billion unique visits in the third quarter of last year alone – to display all possible assistance programs that may be available to buyers looking for properties on its platform.

Another problem is knowing where to find help. And a third is that some lenders and real estate agents look down on down payment assistance.

What’s available

DPR reports that 84% of the 2,180 programs it tracks have been actively funded and available to state and municipal governments, nonprofit organizations, and employers. Each state has more than one program, reports Moss, and several offer more than 100 options. California has the most options, with 350.

Programs include grants and zero or low interest second mortgages with payments that can be deferred or even canceled. Some are aimed specifically at veterans, first responders, educators, people with disabilities, or other special circumstances.

Most programs are aimed at first-time buyers, but some are not. Most have some sort of income or selling price limit. But in some high-cost markets, the income cap can exceed 180% of the region’s median income. Even with income caps, however, the benefits can run into the tens of thousands of dollars. And they can be combined with each other and used with all types of mortgages, including those guaranteed by Uncle Sam.

Benefits like these are worth considering, if only because owning a home is the quickest and surest way to build wealth. If you had bought a home three years ago using one of his state’s programs, Washington’s DeBrock pointed out, you would have already raised thousands of dollars in equity.

Where to find help

One way to find what’s available is to go to downpaymentresource.com, Zillow.com or themortgagereports.com. Or simply search online for benefits available in your state.

You might even ask a lender or real estate agent if they know of such programs in your state. DPR partners with a number of lenders, banks and multiple listing services. Some use the data as consumer information on their websites, while others use it internally to inform their own employees or members.

Unfortunately, not all housing professionals are as knowledgeable about down payment assistance as they should be. Some even turn away from such programs. So if you hit a brick wall, ask others until you find someone who knows what’s available.

Some lenders believe that down payments that do not come solely from the borrower’s wallet are unsafe. Others think these loans are too much to handle. But the people who run state agencies disagree.

Swift in Arizona said it’s actually harder to deal with applicants whose funds come from family or friends than those whose money comes from state-run aid programs. DeBrock agreed.

“The strength of DPA programs is that lenders don’t have to worry about the availability of funds at closing,” DeBrock says. “Buyer must go to close” to access funds.

Charles White, who runs the Florida programs, added, The support is “very trustworthy. …Borrowers are fully guaranteed” to ensure they meet program requirements.

Another problem is that some lenders do not prioritize affordable loans. But then, that’s another story.

Lew Sichelman has been covering real estate for over 50 years. He is a regular contributor to numerous shelter magazines and housing industry and housing finance publications. Readers can contact him at [email protected]

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