Frequent Down Payment Assistance Program Questions

What is down payment assistance?
Typical home loans allow a percentage of the down payment required by the buyer to come from one of two sources: buyer's funds or/and a gift from relatives. In either case, the down payment cannot be a loan or require any type of repayment from the buyer. This is where down payment assistance comes in.

How does the seller benefit by using down payment assistance?
By using down payment assistance, a seller can market a home to a much larger group of prospective buyers than sellers who do not utilize the program. Millions of people want to buy homes, have the income and credit to qualify for loans, but do not have the funds necessary for the down payment and closing costs. Down payment assistance bridges this gap. Typically it can take weeks or even months to sell a home. Most sellers reduce their prices 7-10% or more and make other concessions in the process of selling their homes. With down payment assistance most sellers are able to negotiate a better price and sell the home faster.

What does a buyer need to do to get gift funds?
Talk with your lender or Realtor and inform them that you would like to purchase a home using down payment assistance. If the lender or Realtor that you use is not familiar with the local programs, please research them yourself because there are always changes occurring.

What makes a buyer qualified for down payment assistance?
Down payment assistance varies from program to program. Some typical guidelines might require homebuyers to have low to moderate income, acceptable credit, limited assets, and the property to be a primary residence.

Will down payment assistance work with non-conforming loans?
Yes, if the lender allows non-sourced money for what you are requesting the funds for. A typical non-conforming borrower may be qualified for 80% or 85% loan-to-value, but in most cases, the lender may require only 5% to 10% of the down payment to be sourced. The remaining 5% to 10% could come from down payment assistance, but you should check with each lender on his policy.

In what States is down payment assistance allowed?
Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, DC, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming.