Down payment assistance programs and grants are designed to help first-time home buyers with the cost of purchasing a home. These programs provide financial assistance to help cover the cost of a down payment and closing costs. The main benefit of a down payment assistance loan is that it can help make homeownership more accessible to those who may not have the financial resources to make a large down payment.
What is Down Payment Assistance?
Down payment assistance is a type of financial assistance that helps first-time home buyers cover the cost of a down payment and closing costs. This assistance can come in the form of grants, forgivable loans, deferred-payment loans, low-interest loans, and matched savings programs.
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Who Qualifies as a First-Time Home Buyer?
In order to qualify as a first-time home buyer, you must not have owned a home in the past three years. Additionally, you must meet certain income requirements and have a good credit score.
How Does Down Payment Assistance Work?
Down payment assistance programs and grants provide financial assistance to help cover the cost of a down payment and closing costs. This assistance can come in the form of grants, forgivable loans, deferred-payment loans, low-interest loans, and matched savings programs.
Grants:
Grants are typically provided by state and local governments, as well as non-profit organizations. Grants are typically awarded based on need and do not need to be repaid.
Forgivable Loans (at 0% Interest):
Forgivable loans are loans that do not need to be repaid if certain conditions are met. These loans typically have a 0% interest rate and are typically offered by state and local governments.
CHENOA Fund Down Payment Assistance Program
One of the most popular Federal DPA programs is the CHENOA Fund Down Payment Assistance Program. This program provides down payment assistance to qualified homebuyers in the form of a second mortgage loan. The loan is typically equal to the amount of the down payment, and is repaid when the borrower refinances or sells the home.
The main benefits of the CHENOA Fund Down Payment Assistance Program are:
- Low Down Payment: The CHENOA Fund Down Payment Assistance Program allows borrowers to make a down payment as low as 3% of the purchase price of the home.
- Low Interest Rates: The CHENOA Fund Down Payment Assistance Program offers competitive interest rates, making it easier for borrowers to afford their monthly mortgage payments.
- Flexible Credit Requirements: The CHENOA Fund Down Payment Assistance Program allows borrowers with a credit score as low as 640 to qualify for the program.
- No Monthly Payments: The CHENOA Fund Down Payment Assistance Program does not require borrowers to make monthly payments on the loan.
- No Prepayment Penalties: The CHENOA Fund Down Payment Assistance Program does not charge any prepayment penalties, allowing borrowers to pay off the loan early if they choose.
CHENOA Fund Qualifications
In order to qualify for the CHENOA Fund Down Payment Assistance Program, borrowers must meet certain credit and income requirements. Borrowers must have a minimum credit score of 640 and a maximum debt–to–income ratio of 45%. Additionally, borrowers must have a minimum of two years of rental history and must have a minimum of two years of employment history. The CHENOA Fund Down Payment Assistance Program is a great way for borrowers to purchase a home with a lower down payment than is usually required. The program offers competitive interest rates, flexible credit requirements, no monthly payments, and no prepayment penalties, making it easier for borrowers to afford their monthly mortgage payments.
Deferred-Payment Loans (at 0% Interest):
Deferred-payment loans are loans that do not need to be repaid until a certain period of time has passed. These loans typically have a 0% interest rate and are typically offered by state and local governments.
Low-Interest Loans:
Low-interest loans are loans that have a lower interest rate than traditional loans. These loans are typically offered by banks and other financial institutions.
Matched Savings Programs:
Matched savings programs are programs that match a portion of the money saved by the home buyer. These programs are typically offered by non-profit organizations.
Down payment assistance programs and grants can help first-time home buyers purchase a home. These programs provide financial assistance to help cover the cost of a down payment and closing costs. They can also provide access to more affordable mortgages, making it easier for first-time home buyers to purchase a home.
At Forward Loans, we offer all of the Down Payment Assistance programs listed, including FHA loans, VA loans, USDA loans, and conventional loans. Our team of experienced loan officers can help you find the best program for your needs and provide you with the information you need to make an informed decision.
Homebuyer tip:
Down Payment Assistance FAQs
What is Down Payment Assistance?
Answer: Down Payment Assistance (DPA) is a type of financial assistance that helps homebuyers cover the initial costs of purchasing a home. It can come in the form of grants, loans, or a combination of both.
Who is eligible for Down Payment Assistance?
Answer: Eligibility for DPA varies by program, but generally, first-time homebuyers, low- to moderate-income households, and those with limited funds for a down payment may qualify.
How much Down Payment Assistance can I get?
Answer: The amount of DPA available depends on the program and your individual circumstances. Generally, DPA can cover up to 3-5% of the purchase price of the home.
How do I apply for Down Payment Assistance?
Answer: To apply for DPA, you must first contact a participating lender. The lender will review your financial situation and determine if you are eligible for the program.
What are the requirements for Down Payment Assistance?
Answer: Requirements for DPA vary by program, but generally, you must meet certain income and credit score requirements, be a first-time homebuyer, and have a minimum down payment.
What types of Down Payment Assistance are available?
Answer: DPA can come in the form of grants, loans, or a combination of both.
What is the difference between a grant and a loan?
Answer: A grant is a sum of money that does not need to be repaid, while a loan must be repaid with interest.
How long does it take to get Down Payment Assistance?
Answer: The amount of time it takes to get DPA depends on the program and your individual circumstances. Generally, it can take anywhere from a few weeks to a few months.
What are the benefits of Down Payment Assistance?
Answer: DPA can help make homeownership more affordable by reducing the amount of money needed for a down payment. It can also help reduce closing costs and provide access to more competitive mortgage rates.
Are there any risks associated with Down Payment Assistance?
Answer: Yes, there are risks associated with DPA. For example, if you fail to make your loan payments, you may be subject to foreclosure. Additionally, some DPA programs may require you to stay in the home for a certain period of time or you may be required to pay back the assistance.
Michael Creel is a veteran in the marketing industry, with a proven track record of helping brands in the real estate and lending space build a strong presence across a number of social platforms.
He’s built and implemented several marketing strategies and installed the digital and social framework to support several mortgage teams, loan officers, realtors, multiple new home builders as well as various brands in other spaces.
In 2020 Michael opened Forward Loans, a duly licensed mortgage brokerage, offering digital strategies and marketing automation to loan officers, while focusing on process and service for clients and employees.