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Summary DPA & Grants: Quick read bullet points of what you need to get a down payment assistance
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Summary DPA & Grants: Quick read bullet points of what you need to get a down payment assistance.
Down payment is historically the most challenging barrier to home ownership.
Down Payment Assistance Programs (DPAs) are designed to come up with $10’s of thousand for down payment and help you to buy your house.
There are DPA programs in all 50 states and territories & Puerto Rico
Summary Down Payment Assistance DPA & Grants
Down Payment Assistance – DPAs & Grants – are valuable funds made available to low-and-mid-income (LMI) homebuyers to use to pay for mortgage down payment and/or closing costs
Some of these funds are given out right yet some need to be repaid. It will depend on the entity who set and run the funds
There is down payment assistance – DPAs and grants in all 50 states and the USA territories & Puerto Rico
Down Payment Assistance can be found even in New York City: A whopping $100,000 (Because house prices are notorious amongst the highest around the country)
More typically – like here in Georgia, the programs will make $10,000 to $12,000 per qualified homebuyer
DPA programs as stated above are designed to help low-to-mid-income, so the home
Funds for DPAs come from a variety of sources:
Federal government funds allocation
State and local housing authorities
Banks and mortgage companies
Non-profit entities
Grants by definition are non-repayable.
All the principal is given to the homebuyer at the time of the closing. There is no interest and no liens
Down Payment Assistance Generate a 2nd Mortgage & A Lien
Each state will structure how their program will run:
They can be repayable: The recipient has to pay funds back
OR non-repayable/forgivable loans: The recipient does NOT have to pay funds back
Down Payments Assistance (DPA) programs come in at least three different form of a 2nd mortgage AND they will all generate a lien:
I) ‘Active’ 2nd mortgages
In this form of program, the 2nd mortgage is ‘active’ – there are interest AND principal payments and they are due right away along with the 1st mortgage payments every month
When principal amount is paid in full, Lien is satisfied and release when 2nd mortgage is paid in full
II) Deferred payment loan / ‘silent’ repayable 2nd mortgages
The ‘silent’ 2nd mortgage is so called because the homeowner does NOT pay interest nor the principal for as long as they own and live in the home
Lien only becomes due when home is sold, refinanced OR the owner passes away
III) Forgivable loans / non-repayable (Phase-out) 2nd mortgages
A) There is a period of ‘vesting years’ – typically 3 to 5 years in which if the homebuyer sells the home, the DPA portion of the home sale has to be returned in full.
There are those years in between in which the homeowners are not entitle to the whole bit, actually, none of it!
After the ‘vesting period,’ each year a portion of the DPA belongs to the homeowner…
Let’s say, as an example, 20% each and year after the ‘vesting period’ the sales proceed belongs to the homeowner …therefore 5 years after the initial ‘vesting period’ 100% of the initial amount of the DPA will belong to the homeowner.
After both the ‘vesting period’ AND the ‘phase-out years’ Proceeds of an eventual sale of the home will – legally - belong to the home owner
At the end of the “phase-out” period, the initial DPA funds loaned to the homebuyer now belongs 100% to the homebuyer!
At that point, the lien will be released!
Other Forms of Down Payment assistance
There are still other instruments that also may help you to achieve to accumulate some savings save some funds for down payment:
Mortgage lender offerings
Development Accounts (IDAs)
& Matched savings programs – sometimes they are matched in multiples to the amount deposited by the future homebuyer
DPAs and grant may be created with specific purpose in mind:It can be to attract and create a community in a certain area
Those are typically called TAD – Tax Allocation District
There many which are to attract professionals such as:Teachers and school personnel
Medical professionals
Firefighters
Paramedics
Law enforcement
Down Payments Assistance programs are NOT Lottery
Down Payments Assistance programs are NOT lottery. They are rather a permanent resource of the community …AND are renewed every year!
They are there to serve! Call and talk with them!
DPAs are created to help homebuyers of low-to-mid-income (LMI) folks – most program will strictly enforce income levels
Naturally the income level is directly related to the county/city where you live in …thus NYC DPA can go upwards of $100,000! In Georgia you still can by the whole house with that much!
So, Georgia Dream program is adjusted accordingly to $10,000 to $12,000 per qualified applicant
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Too little income may not qualify
Too little income may not qualify: Unfortunately, the funds must have a reasonable expectation that homebuyer will be able to make payments on the house in the long haul, so if an applicant cannot show enough income, he/she will not be approved at the time
However, do not give up: There are housing counselors all over as well.
Housing counselor may work within the DPA providers entities or they might be a resource they can refer you to
Connect with one of those! They are trained to help you!
DPA Programs Flow
DPA programs pretty much follow this flow
State=> county=> City
Start calling the housing authority in your city…
Find their local contact where you live and call/email them
Chances are going to help or they know someone who will help you and put you touch with those other folks
Also, you should talk with lenders and real estate professionals.
Your REALTOR® and your loan officer both or either can be a good partner for you to achieve your homeownership goals.
Although not all professionals work with DPAs.
My warmest wishes of success in homeownership journey!
ProHOMEBuzz Tip: Georgia Dream
ProHOMEBuzz Tip: Georgia Dream is a robust down payment DPA program helping homebuyers all across the state.
Georgia Dream provides affordable financing options, down payment and closing cost assistance, and homebuyer education.
Active military members, public protectors, educators, healthcare providers, and residents with family members living with a disability qualify for special down payment loan options.
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