With current home prices low and mortgage rates at historic lows, many are eager to purchase a home. However, due to the challenging financial environment with foreclosure rates skyrocketing to historic highs, down-payment requirements for home loans are now at 15 to 20%. It is believed that the more down-payment is invested, the less likely the borrower is to walk away from the loan and avoiding a foreclosure.
The top reason renters say they can’t buy a home is because of a lack of down-payment. Many potential home-buyers find a 15 to 20% down-payment requirement unattainable. So, how is one to take advantage of the low home prices and mortgage rates to purchase a home? State and local governments are now offering down-payment assistance programs to help borrowers get the down-payment needed to qualify for the home loan.
There are many benefits to qualifying for down-payment assistance. There are programs that offer up to 50% of the sale price in loans with interest rates at 0% to 2% to people with little or no money to put down. If the homebuyer gets the mortgage through the programs’ preferred lender, the mortgage rate may be up to 1% lower than the average mortgage rate.
There is no official list of down-payment assistance programs available but there are many valuable resources available. A great starting point would be to go to the Down Payment Resource web-site to determine what programs you may qualify for by answering a few simple questions.
Mortgage lenders, realtors, the Florida Housing Finance Corporation, and the local government are a few examples of other resources available to find more information about these programs. Look for programs that offer grants because although they tend to offer less assistance, buyers don’t have to pay the money back. You may also want to consider programs tailored to a professional group such as the Teacher Next Door Program which offers HUD-owned, single family homes to public and private school teachers at a 50% discount.
The following are 3 examples of Florida Down-Payment Assistance Programs available to first time homebuyers or buyers who have not purchased a home in the past 3 years.
1. City of Tampa Mortgage Assistance Program
Benefits: $40,000 maximum first mortgage loan amount with no interest (0%).
Maximum Purchase Price: $258,690.
Income Restrictions: Up to $45,200 for a family of four.
Payback Terms: This is a deferred payment loan requiring no monthly payments as long as the property remains a primary residence. A default will cause the loan to become due and payable.
2. Hillsborough County Florida First
Benefits: Moderate Income Borrowers get up to $5000 to assist with down-payment and closing costs for the second mortgage with a low fixed rate. Low Income Borrowers get up to $7500 for low income borrowers to assist with down-payment and closing costs for the second mortgage.
Maximum Purchase Price: $263,250.
Income Restrictions: Up to $83,160 for a family of 3 or more.
Payback Terms: Moderate Income Borrowers would repay the loan over 10 years. Low Income Borrowers would repay the loan when they sell or refinance the home, or at the end of the term of their first mortgage.
3.Realtors Care Foundation of GTAR Inc.
Benefits: $5000 grant for down-payment assistance and closing costs for first mortgage.
Maximum Purchase Price: $292,500
Income Restrictions: Up to $47,350 for a family of four.
Payback Terms: Does not have to be repaid as long as the homebuyer remains in the home.