How To Qualify For Down Payment Assistance Programs 2021!

by Jan 24, 2021

Believe it or not, there are grants available specifically to help you buy a house without a down payment. And if you qualify, you have the potential to save thousands of dollars when buying a home. Today I will clarify how to qualify for down payment assistance programs and where you can find a list of programs available in your area! 

Let’s get right into the qualifications! With over 2,000 down payment assistance programs available nationwide, the specific qualifications needed are going to differ. However, today I will be explaining the qualifications that need to be met across the board when it comes to down payment assistance that lenders will look at to determine if you are eligible. 



Restricted to First Time Home Buyers


Most down payment assistance is restricted to first time home buyers. But, a first time home buyer is actually defined as someone who has never owned a house before or someone who has not owned a home in the last three years. Even if you have owned a home previously, you may still be eligible for down payment assistance programs if your last time owning a home was over three years ago!


Low to Moderate Income Earners


Down payment assistance programs are restricted to those who are low to moderate income earners. This restriction was added as a way to regulate these assistance programs and give available funds to those who have a hard time saving for a down payment due to limited earnings. You can check to see if you would be classified as a low to moderate income earner by looking up the median income in your state.

In order to find out if you are in a low or moderate income bracket, lenders are going to look at how much you make and compare that to the median in your area. Low income earners typically make 50% of the median income or less. For example, if the median income in your area is $60,000 per year, you would be qualified as a low income earner if you make $30,000 or less. Moderate income earners are defined as making up to 80% of the median income. So if you make 80% or less of your area’s average income, there is a good chance that you are eligible for down payment assistance. 


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Primary Residence


The third thing that lenders are going to check is that you are applying for down payment assistance for a home that will be your primary residence. Down payment assistance programs are only available for  purchasing a primary residence. You can not use down payment assistance to purchase an investment property like a rental home, or use the assistance to purchase for someone else. 


Location Specific


Not all down payment assistance programs are available everywhere. Some down payment programs are national but others are state, county or even city specific. In addition to this, some down payment assistance programs will dictate where you can buy the home. The USDA Rural Development loan is an example of this. To use the rural development loan with 100% financing and no down payment, you will need to buy a home in a rural development eligible area. 


Other types of down payment assistance programs may dictate that the home you are buying be in a certain census tract. The census tracts that you may be able to buy a house in are neighborhoods where 70% of the households make no more than 80% of the state’s average income. Organizations that provide down payment assistance set these guidelines as a way to make sure that you are not going out and buying a million dollar home but are sticking to communities average to the area. 


Use With A Loan


Although the phase “down payment assistance program” may lead you to believe otherwise, down payment assistance in many cases is not an all encompassing program. In fact, usually the assistance for the down payment is paired with an FHA or Conventional loan. While FHA and Conventional loans usually require 3.5% down payment or more, these loans can be combined with down payment assistance which makes buying a house more affordable. Rather than searching for down payment programs on your own, fill out a loan application with a lender. Lenders will review your finances and let you know what programs you can take advantage of! 


Work With A Down Payment Assistance Lender


Just as not all Realtors have the knowledge to work with down payment assistance, not all banks and lenders offer it. It is my recommendation to first find and connect with a Realtor in your area that is familiar with down payment assistance programs. A Realtor with program knowledge will be able to point you towards different lenders that offer down payment assistance in your area.


Where can I find Down Payment Assistance Programs in my area?


Select your state from this list of HUD housing assistance information. Find the sanction that says “Homeownership Assistance” or “Homebuying Programs” these sections will take you to a list of state specific down payment assistance programs in your area in addition to county and city programs as well.

Nicole Nark Little Rock Real Estate AgentHi There! My name is Nicole Nark and I am a Real Estate Agent in Central Arkansas. I have personally wrote and researched the topics found in this blog so that I can provide quality and up-to-date content for you. Please share this article and leave me a comment if there is a topic you wish to learn more about!
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