Nearly half of consumers assume you need to put down at least 16% of a home’s price to be able to get a mortgage. But the reality is, down payments can be as low as 3%. In 2021, the average down payment for first-time homebuyers was just 7%, and 17% for repeat buyers.
No matter how much you want to put down on your new home, there are thousands of programs that can help provide the cash. Here’s a breakdown of where to find them, what you’ll need, and how down payment assistance can help you become a homeowner.
What’s a down payment assistance program?
A homebuyer program usually offered by states, counties, and cities to help homebuyers pay for their down payment and closing costs.
They can come in many different forms, including the following:
- Grants: A sum of money as a gift.
- Forgivable loans: A no-interest loan, sometimes called a “silent second mortgage,” that’s forgiven after a certain period of time, as long as you still own and reside in the home.
- Deferred payment loans: A no-interest loan that only requires repayment when certain conditions are met, like the mortgage is refinanced or the home is sold.
- Low-interest loans: In other words, a second mortgage. This is repaid over a certain period of time, ideally with less interest than your first mortgage.
What do I need to be eligible for down payment assistance?
Eligibility requirements vary depending on the program you choose. Generally, here are a few things you may need to do to get approved:
- Meet certain income requirements, since many programs are designed for low- and moderate-income borrowers.
- Buy a home in a certain price range — often below the area’s median home price.
- Take a homebuyer education course.
- Be able to contribute to the down payment yourself.
How do I get down payment assistance?
With many programs available, it just takes finding the right fit for your situation. The most reputable down payment assistance programs are funded by state or federal governments, so it helps to start there. Check your local government website for its resources for homebuyers, or start with the programs approved by the U.S. Department of Housing.
Often, your basic demographic information can help you narrow your search. Beyond your location, many programs are dedicated to helping first-time homebuyers specifically. Keep in mind that first-time homebuyers are defined as anyone who hasn’t owned a home in the last 3 years. Even if that isn’t the case, don’t worry — over 38% of all programs are for repeat homebuyers.
Landis coaches are always happy to share their network of thousands of down payment assistance resources. Ask for recommendations and they’ll help you find the right fit for what you need.
What else do I need to know?
#1 Make sure you choose the right lender
Not all lenders are approved to work with down payment assistance programs, so before getting deep into a mortgage application, confirm that your loan officer is able to help. The down payment program or agency you work with may recommend lenders to you.
#2 Give yourself the time you need
Most of these programs can take around 6 weeks or more to fully process. It’s important to line up your down payment needs with the mortgage you’re getting to buy a house. Some experts recommend having this ready before even making an offer, so there’s less chance it can fall through before closing.
#3 Get support and extra time from Landis
Being a Landis client can give you a huge advantage, because instead of a matter of weeks, you’ll have at least a full year to arrange down payment assistance. Your Landis coach will be there to help you make it happen. Just remember, down payment assistance can’t be applied towards your initial deposit on the home Landis buys for you.