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Can I Qualify for Down Payment Assistance?

Can I Qualify for Down Payment Assistance?

April 10th, 2019 | Purchasing a Home, First-time Homebuyers

One of the biggest obstacles to homeownership is coming up with enough cash for a down payment. When your own savings are not adding up quickly enough and you don’t have a rich uncle to tap for an early inheritance, you may find some help in a down payment assistant programs.

Down Payment Assistance Programs

Many state and local governments as well as local lending institutions and non-profit organizations have created down payment assistance programs because of their vested interest in helping residents and fellow community members become homeowners. Those who own homes are likely to take better care of their properties and participate more in their communities. Because of this, down payment assistance programs are designed to help potential homeowners overcome the most common hurdle. They can offer help in the form of grants, forgivable second mortgages, and even savings matching programs.

Down payment grant programs gift borrowers money for down payment or closing costs as long as they meet certain requirements. Grants are the most advantageous for borrowers as this money does not have to be repaid. 

Another great option, however, are programs that offer forgivable second mortgages. These loans can charge interest, but many of them offer zero percent interest with no payments as long as the loan requirements are met. After borrowers stay in the home for a certain amount of time without refinancing, the loan is completely forgiven.

Other agency and lenders offer matched savings programs. These are similar to employer retirement investment matching programs. For every dollar a potential borrower puts in to the down payment matching account, the sponsoring organization with match it. Some even multiple their matching contribution. For example, Indiana’s Individual Development Account program, puts in $4 for every $1 contributed by savers. These programs can obviously help potential homeowners save up for a down payment much faster.

Program Requirements

Each program has its own specific requirements, but they are often based on things like income-level, credit score, and how many members are in the household. There are also more specific programs that require military or veteran status or public service employment. Other programs may require borrowers to complete a homebuyer education program. There are also often rules about the property itself, ranging from the neighborhood to the purchase price.

Borrowers should also be aware that taking part in a down payment assistance program may come with a higher interest rate.  The risk to lenders increases when borrowers do not have as much to lose on the loan, so you may have to pay more in interest if your down payment is not completely self-funded.

If down payment assistance sounds like something that could aid you in your homeownership quest, start by researching programs available from your state or local government. Check with community lenders and non-profits as well. While it takes some work to locate these programs, it will be worth the effort if you are able to realize your dream of homeownership sooner.

Or you can just call us at 847-257-7278. We know what state, community and local down payment and grant assistance programs are available in Illinois and the qualification guidelines for each of them.

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Disclaimer:
Prime 1 Bancorp, Ltd is not affiliated with any government organization or bank nor do we act on behalf of the FHA or VA. This material is not from HUD or FHA and has not been approved by HUD or a government agency. We are not a Federally chartered or State Chartered Bank. We are an we are an Illinois Residential Mortgage Licensee by the Office of Banks and Real Estate Lic #MB.6761138, a California CFL Licensed Mortgage Brokerage by Department of Business Oversights Lic #60DB055973, a Colorado Registered Mortgage Brokerage by Division of Real Estate, a Florida Residential Mortgage Brokerage Licensed by the Office of Financial Regulation Lic #MBR1930 dba Prime 1 Mortgage Inc, a Kentucky Mortgage Loan Broker Licensed by the Office of Financial Institutions Lic #MB729362, a Tennessee Licensed Mortgage Broker by the Department of Financial Institutions Lic #218020, a Texas SML Licensed Mortgage Brokerage by the Texas Department of Savings and Mortgage Lending, and a Wisconsin Licensed Mortgage broker by the Department of Financial Institutions Lic #1434638BR Prime 1 Bancorp, LTD Corporate Office is located at 2720 S. River Rd Suite 50, Des Plaines, IL 60018 our Toll Free Number is 888-205-3737. NMLS: 1434638

Loan product availability is subject to qualification of the borrower and loan approval after full review of the file. Not every applicant qualifies or is eligible for every loan program. Some loan products may not be available in all states. Loan approval, note rate and annual percentage rate are dependent on factors including, but not limited to, credit, collateral, income, assets and overall financial history. Not all applicants will be approved for a loan. All loan programs, terms and annual interest rates are subject to change without notice. NMLS: 1434638

Figure: 7 TAC §80.200(b)

"CONSUMERS WISHING TO FILE A COMPLAINT AGAINST A COMPANY OR A RESIDENTIAL MORTGAGE LOAN ORIGINATOR SHOULD COMPLETE AND SEND A COMPLAINT FORM TO THE TEXAS DEPARTMENT OF SAVINGS AND MORTGAGE LENDING, 2601 NORTH LAMAR, SUITE 201, AUSTIN, TEXAS 78705. COMPLAINT FORMS AND INSTRUCTIONS MAY BE OBTAINED FROM THE DEPARTMENT’S WEBSITE AT WWW.SML.TEXAS.GOV. A TOLL-FREE CONSUMER HOTLINE IS AVAILABLE AT 1-877-276-5550.

THE DEPARTMENT MAINTAINS A RECOVERY FUND TO MAKE PAYMENTS OF CERTAIN ACTUAL OUT OF POCKET DAMAGES SUSTAINED BY BORROWERS CAUSED BY ACTS OF LICENSED RESIDENTIALMORTGAGE LOAN ORIGINATORS. A WRITTEN APPLICATION FOR REIMBURSEMENT FROM THE RECOVERY FUND MUST BE FILED WITH AND INVESTIGATED BY THE DEPARTMENT PRIOR TO THE PAYMENT OF A CLAIM. FOR MORE INFORMATION ABOUT THE RECOVERY FUND, PLEASE CONSULT THE DEPARTMENT’S WEBSITE AT WWW.SML.TEXAS.GOV.