How Does Government Home Down Payment Assistance Work?
Other People Are Reading
-
The American Dream
-
The marketplace for homes fluctuates, but the desire for people of all socioeconomic levels to own their own home will always be strong. Some buyers, however, face difficulty when trying to get enough money for a down payment.
The U.S. Department of Housing and Urban Development (HUD) offers resources to prospective buyers and, through their Federal Housing Administration (FHA), low-interest and insured loans. Since 1934, the FHA has worked with over 34 million people to help them become homeowners.
Down Payment Assistance
-
A down payment on a home can be anywhere from 5 20 percent, depending on the buyer's credit rating, or $9,580 to $38,320 based on a $191,600 home (average home price, according to the National Association of Realtors). For home buyers who are struggling to come up with a down payment, HUD partners with nonprofit housing organizations to provide down payment assistance. The program is called Down Payment Assistance through Secondary Financing Providers (DAP).
HUD maintains four regional Homeownership Centers (Atlanta, Denver, Philadelphia and Santa Ana, California) that manage a list of nonprofit groups who help home buyers secure down payment assistance. -
Types of Assistance
-
Along with an FHA mortgage, a nonprofit housing organization can provide assistance with some or all of the down payment for a new home buyer. Each nonprofit must meet certain regulatory requirements to be able to provide this assistance.
Some state and local housing authorities, such as the California Housing Finance Agency or the New York City Department of Housing Preservation and Development, offer home down payment assistance. Certain limits apply according to each entity.
A home buyer can also look to a cash gift from a family member, friend or charitable organization to help with the down payment. In order for this gift to take place, particularly from a charitable organization, certain FHA and HUD regulations must be complied with and the lender must ensure that the gift is properly documented.
-
