Most home buyers believe that they must have a 20% down payment before they can even think about purchasing a new home. This is simply not true! While there is nothing wrong with saving towards that amount, there are several programs available to first-time home buyers, as well as repeat buyers. With over 2,000 such programs in the United States, it should not be a problem to find one in your area.

  • Down payment assistance (DAP) are available in the form of grants or loans and are most often available through state and federal agencies:
    • Grant: money that is gifted and never has to be repaid
    • Loan: a second mortgage that is paid monthly along with the primary mortgage
    • Deferred loan: a second mortgage with deferred payments that only have to be paid when you move, sell, or refinance
    • Forgivable loan: a second mortgage that is forgiven over a set number of years (often five, but could be up to 15 or 20); repayment is necessary only if you move, sell, or refinance too early
       
  • Many lenders offer DAP that is built into the loan program, especially for first-time home buyers.
     
  • Government-backed lenders, such as FHA and USDA, require as low as 0-5% down on a home purchase. Check their websites for more information to see if you qualify.
     
  • Fannie Mae’s HomeReady Mortgage program offers DAP; see website for qualification and loan information.
     
  • Veterans can qualify for a mortgage that requires no down payment. Visit the Veterans Affairs government website to learn more about their mortgage loan program.
     
  • Public servants, such as teachers, first responders, and nurses can check out Next Door Programs for information about DAPs.
     
  • Not only do some lenders offer DPA, but they also offer loans to cover all or part of the closing costs, which can cost, on average, 2-6% of the purchase price of the home.

Take care when you are searching online for information about DAPs; many commercial websites are set up to appear to be the agency when they are in reality a lender or a website that receives kickbacks from lenders. Look for the contact information in your area or on official government websites so you can speak to someone who has no ulterior motive to assist in borrowing money to purchase a new home.

Courtesy of New Castle County DE Realtor Tucker Robbins.