Down Payment Assistance Programs for Homebuyers in 5 States

  • Buying a home is tough for most millennials, and many can’t even save enough for a 20% down payment.
  • Dyllon Ryser, 21, got a $20,000 loan from his Utah town seven months ago to pay off his house.
  • Other programs like this exist in all 50 states, and we’ve listed some for the 5 most populous.

For many people under the age of 40, the thought of buying a home seems prohibitive, and there are countless others who think they will never obtain the title of owner. While some data indicates that the frenzied real estate market that defined 2022 is starting to calm down, prices for the best properties in the hottest markets are still sky high and out of reach for many potential buyers.

However, any potential buyer still planning to move forward with a home purchase in the coming months should continue to do their due diligence on more than local prices and closing prices. There are many programs – county and local – across the country that can help potential buyers overcome the main hurdle of home ownership.

For example, 21-year-old Dyllon Ryser took advantage of such a program and was able to close his first home seven months ago. Ryser is a firefighter for the town of Ogden in Utah, where there is a homebuyer assistance program called “Own in Ogden”.

According to the city’s website, This program offers a down payment loan of up to $10,000 to anyone purchasing a primary residence within the city limits of Ogden, Utah, with higher amounts available to local teachers in the kindergarten to grade 12, police officers and firefighters. These loans are 0% interest, deferred payment loans that are only canceled if the recipient sells the home or ceases to use the home as their principal residence.

In Ryser’s specific case, he was able to take out a $20,000 loan for a down payment on a house and said that as long as he didn’t sell the house and stay at his job at the Ogden Fire Department for at least 10 years, he will not have to repay the loan at all. In the best-case scenario, Ryser received a large initial amount to help build capital.

Homeownership programs have helped people who never thought they’d own a home

Ryser’s story is particularly unique due to his unusual and difficult upbringing. He was homeless for long periods as a child, was placed in and out of several foster homes for a few years, and endured additional domestic instability after being released from foster care.

Becoming a firefighter was a dream Ryser had had since he was a child. His career choice, which made him eligible for this loan scheme, was just an added bonus. However, owning his own home has had an immeasurable impact on his life.

It’s not just the need for shelter, but the 21-year-old firefighter is now building generational wealth through the equity in his home, and with the extra space and financial security he’s able to to help take care of his younger brother.

Saving for a down payment can be difficult if you live paycheck to paycheck and have bills to juggle. Some experts have suggested that, especially during times like the country is currently experiencing high inflation, it doesn’t make sense to wait until you’ve saved enough money for a 20% down payment on a home.

There are other ways to get help with down payments or mortgages that require less money.

A common and popular way to buy a home with less money is available to people who have been honorably discharged from the US military: VA loans.

Getting a VA loan means you don’t necessarily have to deposit any money at all, and applicants will be offered competitive low-interest mortgages. It also reduces closing costs for the borrower and is a lifetime offer for all honorably discharged veterans.

Federal Housing Administration (FHA) loans are another example of a federal program that helps people with less money access homeownership.

FHA loans differ from VA loans, however, in that the terms are less favorable: although all you need is a credit score of 580 and the ability to deposit 3.5%, you will get a higher interest rate. and will need to take out a private mortgage. insurance (PMI) in exchange for the low down payment.

Most borrowers who put less than 20% on a home will end up having to buy PMI, a fixed cost you’ll have to pay each month. However, after making regular payments for a few years, most homeowners will have enough equity in their property to refinance on better terms and forgo private mortgage insurance.

That said, FHA loans are still quite popular — especially with first-time home buyers — because of the way they make homeownership much more easily accessible to low-income and low-income earners. use as down payment.

You can also get help by researching down payment assistance programs locally.

Own in Ogden, the program Ryser benefited from, is not entirely unique. There are many programs across the country that also help home buyers. In Ryser’s home state of Utah, there are several counties and cities that also provide home buying assistance to residents.

According to the US Department of Housing and Urban Development, there are down payment assistance programs in all 50 states. Here are some examples of programs like this in America’s five most populous states:

California

The state of California has a down payment assistance program called MyHome that offers people deferred payment loans equivalent to a 3% or 3.5% down payment (with a cap of $11,000). Interest rates for this program can vary depending on the borrower’s circumstances, and this program is only available to first-time home buyers with certain limits on household income.

To find out if you are eligible, you can consult the program website.

Texas

Texas has a program called My first home in Texas which can help up to 5% of the home’s value for a down payment, as well as provide the borrower with a 30-year mortgage at competitive rates.

This program is only available to first-time home buyers and veterans and has other requirements, such as a minimum credit score of 620 and income limits.

Florida

In Florida, several down payment assistance programs are available to homebuyers who obtain a mortgage through the state. Homebuyer Loan Program.

Qualifying for this program means you are a first-time home buyer with a credit score of at least 640, have completed homebuyer training, are buying a home that is below limit set by the county where the home is located and you have an income below certain limits.

For down payment assistance, there are options for “second mortgage” down payment loans of $10,000 or less for those who qualify for the loan. Depending on the type of mortgage you obtain, the interest rate for these additional loans can range from 0% to 3%.

New York

The New York State Mortgage Agency (SONYMA) also offers a down payment assistance loanwhich provides borrowers with a loan at 0% interest on up to 3% of the purchase price of the home, not to exceed $15,000.

This loan is canceled after ten years provided the buyer does not sell or refinance the home during that time.

Pennsylvania

The State of Pennsylvania has several options for borrowers looking for down payment assistance: A $500 grant for those who qualify and take out an HFA Senior Loan or Second Mortgage that covers 4% of the purchase price not to exceed $6,000.

Some borrowers are eligible for a second mortgage loan which covers 5% of the purchase price of the home and includes loan forgiveness on an annual basis of 10% each year, with full loan forgiveness after 10 years.

About Matthew R. Dailey

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