What is a down payment on a home? A down payment is money due up-front for the purchase of a home. The homebuyer pays this money to the lender and the rest of the payment goes towards the mortgage price.
The payment normally represents a percentage of the full purchase price. There are times when you might not be able to come up with the required amount for the approval of your loan by the lenders or financial institutions, but luckily there’re options. You might need assistance. Currently, FHA guidelines allow for down payment assistance either as a gift from family or friends. These funds you receive, however, have to be funds you do not have to pay back.
Money used for the down payment acceptable to come from:
- Personal savings
- Tax returns
- Money from selling another property
- Gifts from family or friends
- Down payment assistance programs
How Your Lender Can Help
Your lender will most likely require some kind of a down payment as an incentive to encourage them to approve your loan and help make your mortgage payments as low as possible. The more of a down payment you can provide the less your mortgage will cost monthly. Down payments in some cases are not refundable. Many of the down payment assistance programs offer loans that do not have to be repaid, this is a very useful thing, especially for those borrowers who are first-time homebuyers or a borrower that has all the elements of a successful buyer, but needs down payment assistance. However, there are certain guidelines required for you to be eligible for the program.
Down Payment Assistance Guidelines
Most mortgage lenders require a down payment of at least 3% of the purchase price. The Federal Housing Administration (FHA) requires a down payment of at least 3.5%. This assistance is not offered to just anyone, you have to be eligible to qualify for down payment assistance, and it’s usually only available for first-time homebuyers.
- A borrower must be a first-time home owner.
- The homebuyer should occupy the home as the primary residence.
- Your income must be lower than the acceptable income limit.
- You must meet the requirements of the lender mortgage insurer.
Because of the lower requirements for down payment, FHA loans seem like a perfect home loan option for many borrowers. Theses down payment assistance programs are available to help you of making your dream of owning a home a reality. The long-term goal of the program is to obtain sustainable housing and growth in personal wealth for all borrowers. The down payment assistance program is usually funded through your city, county, or state government. However, funding programs are constantly changing. Different places have different measures that have to be adhered to qualify for the program.
Finding the right lender for your home loan program is the first step towards becoming a home owner. You want to find a qualified lender who has a long track record of funding the specific loan program you’re interested in. Start your lender search today. Click the link below to be matched with a qualified lending specialist who can help you with your home loan program. It’s quick and easy and only takes a few minutes to get started. Click the link below. Remember rates and programs change almost daily, the only way to lock your rate in is to start your loan search today.