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How Down Payment Assistance Can Help You

If you find that you lack sufficient cash on hand to make a down payment for the house that you want to buy, that does not mean that you must look for other options.

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How Down Payment Assistance Can Help You

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  1. How Down Payment Assistance Can Help You If you find that you lack sufficient cash on hand to make a down payment for the house that you want to buy, that does not mean that you must look for other options. Down payment assistance programs might be able to help. Many counties, cities, and states offer no-interest loans and grants to enable first-time home buyers afford closing costs and down payments. So, be sure to check with state housing finance agencies along with county and city government programs that help housing more affordable and accessible to more homeowners. How it works A down payment assistance program may be offered with a mortgage that is tailored to make it easier for first- time home buyers to afford their home. Programs may vary according to the kind of assistance offered, but they usually come in these forms: Forgivable, zero-interest loans – Over a given period, like five years, the loans will be forgiven. You do not have to repay the money as long as you are still the owner of the property and you are living in it. Grants – The assistance may be granted to you directly as a money gift. Low-interest loans – These require repayment over a particular period (i.e. 10 years). They spread the closing costs and down payment over many years, so they have the potential to make homeownership more possible. Deferred, zero-interest loans – Conditions and terms may vary, but they usually do not have payments on closing costs and down payment until the property is sold, the mortgage reaches its end of term, or the mortgage is refinanced. Is it right for you? Many down payment assistance programs are designed for first-time home buyers, but there are also programs for those who have already owned a home. ‘First-time home buyer’ is defined in the program as someone who has not owned a house for the past three years. A mortgage broker can help you find and select an appropriate program and walk you through the requirements. To qualify, you will need a minimum credit score of 620, your debt ratio is not exceeding 45%, and your income is at 80% Average Medium Income.

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