Raising enough cash for a down payment in order to qualify for a home loan program is often a hurdle for homebuyers. But there are loans, tax credits, grants, and other down payment assistance programs that can help you clear the roadblocks and achieve your dream of homeownership by getting approval for a mortgage loan.
There are different types of down payment assistance programs. While most of the programs are offered by HFAs, there are also programs that are offered through the country and municipal units of government with guidelines adjusted for local home prices, as well as income levels. So, before you opt for down payment assistance to purchase homes in Texas, it is important for you to know which program you can choose and what the requirements are. To help you, here we have put together a few down payment assistance programs and who can qualify for these.
- Home grants
Home grants are the ideal option for homebuyers who are interested in buying a home but are not exclusive to first-time home buyers. Qualified buyers meeting the program criteria will have no obligation to pay back the granted funds. As mortgage grants are separate from mortgage loans, some may be combined with other programs in order to offer a better incentive to buy a new home loan. Check the eligibility to know whether you can qualify for this down payment assistance program or not.
- Forgivable loans
Also known as a “soft” second mortgage, this loan is forgiven after the homeowner has met certain criteria mentioned by the lender including a period of time the borrower should remain in the home. Once the homeowner has fulfilled the necessary requirements are laid out by the lender, this loan is forgiven. And being a borrower, the funds don’t need to be repaid.
- Non-forgivable loans
Generally, these loans are considered as a silent second loan, which requires the home buyer to pay back the funds when they choose to refinance and transfer title, or sell the home. These loans can also be repaid at a lower mortgage rate. These “secondary” mortgages are often required when a homebuyer needs assistance with the down payment required by the primary mortgage.
- Common programs
There are other programs available to help you fulfill your dream of homeownership. While FHA loans allow the first-time homebuyers to purchase homes easily, military service members and government employees may qualify for a number of programs, such as VA loan programs. If you live in a rural area, you may benefit from a USDA mortgage loan. These programs are designed to help ranchers, farmers, and homebuyers in less populated areas of the country with mortgage assistance.
As the requirements vary from a down payment assistance program to another one, you need to check the requirements and then decide which one will be the right fit for you. So, start looking for various down payment assistance programs, and go for the one that will be an apt choice for you.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.