Many buyers believe that they need to save a 20 percent down payment in order to buy a home, but that’s not ideal (or even possible) for many buyers.
The good news is, you don’t need 20 percent down to buy a home! While it can help you avoid private mortgage insurance (PMI), there are ways to buy a home with as little as a 3.5% down payment, or even 0% for some loan programs. So if you’re struggling to come up with your down payment, there may be programs you qualify for that will allow you to buy a house with less of a down payment than you anticipated needing.
But what are those programs, and how can they support you on your journey to home ownership?
A recent article from realtor.com answered common questions about down payment assistance programs and how they can help homebuyers, including:
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What is down payment assistance? There are currently more than 2,000 down payment assistance programs in the U.S., including ones at the federal, state, and local levels as well as through private organizations. These programs aim to help homeowners cover the cost of their down payment through grants, loans, tax credits, or some combination of those options.
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What are examples of down payment assistance programs? Some popular examples of down payment assistance programs include FHA loans, which are offered through the U.S. Department of Housing and Urban Development (HUD) and allow first-time home buyers to purchase real estate with as little as 3.5 percent down; Good Neighbor Next Door (also sponsored by HUD), which offers steep discounts on listing prices in certain areas (which also equates to lower down payments) for teachers, firefighters, law enforcement officers, and emergency medical technicians; or the USDA Rural Home Loan Program, which helps people buy property in rural locations, often with no down payment required.
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Who is eligible for down payment assistance programs? There are programs for a variety of homebuyers, including first-time buyers, low-income borrowers, minority buyers, civil servants, and veterans. If you’re unsure if you would qualify, reach out to a real estate agent you trust and ask them to refer you to a mortgage expert who can help you find any programs available to you.
