Because of high rents and an ever higher cost of living, putting money aside for a down payment on a property isn’t always easy. In fact, as Time magazine reported in February 2016, many young people don’t just struggle to put a down payment on a house. Instead, first-time home buyers often feel pushed out of the housing market by investors with liquidity who can afford a down payment on a property and after purchase, rent properties for higher markups.
Thankfully, if you are capable of paying your rent on time each month, you are likely more than capable of servicing a home loan. This is why there are a wide variety of down payment assistance programs currently on the market
FHA Minimum Down Payment Assistance
One of the easiest ways to sidestep having to provide a 20% down payment on a house, is to apply for an FHA home loan. This is because as long as you have a credit score of 580 or higher, an FHA home loan will only require you to put down a 3.5% down payment on a property. As an added bonus, FHA lenders will allow borrowers to use funds gifted from friends and relatives as capital.
FHA Down Payment Assistance Programs for Homebuyers
Not to be confused with FHA home loans themselves, various down payment assistance programs exist in many states. These are programs which help potential FHA home loan applicants raise the capital which they need to meet their FHA down payment requirements. Even better, assistance will usually take the form of a grant rather than a loan or repayable financial assistance package.
If you have served in the United States Armed Forces, you might be able to avoid having to put a down payment on a house altogether, providing that you meet the eligibility requirements for a VA home loan.
Guaranteed by the United States Department of Veterans Affairs (VA), a VA loan (for an amount within your counties conventional loan limits) will not require you to put down any money upfront. All you need to qualify is proof of your eligibility status and a credit score of 680 or more.
Down Payment Assistance Loans (DPAL)
In the event that you do not qualify for a VA loan or help from an FHA down payment assistance program, it might be possible to fund a down payment on a house via a down payment assistance loan. These are loans wich vary from lender to lender and which sometimes work in conjunction with FHA home loans themselves. The important thing is to shop around and always research if grant assistance is available through other channels prior to taking out a DPAL.