Unlocking the benefits of down payment assistance
One of the most challenging parts of buying a home in Rhode Island today is coming up with the money for the down payment and closing costs. A great way to make that more affordable is by using a down payment assistance program (DPA). These programs provide eligible homebuyers assistance to purchase a new home. The funds can be in the form of a grant, low-interest mortgage loan, or other incentives to help a buyer purchase a home.
Mortgage Equity Partners has partnered with Essex Mortgage, a company that has helped thousands of homeowners since 2009 get the down payment assistance they need to purchase a new home. Essex works with The National Homebuyer’s Fund (NHF), a DPA non-profit public benefit corporation and an instrumentality of the government under IRS Code Section 115 that never runs out of funds to provide this generous program to our borrowers.
What is the benefit of down payment assistance?
DPA is one of the best tools homeowners have in today’s market to make homeownership more affordable for Rhode Island residents. These programs provide a possible solution to help homebuyers who need financial support. With a shortage of affordable housing across the country, these programs are more important than ever to help potential homebuyers enter the housing market. The current housing shortage has been driving up home prices on single-family homes, increasing the down payment requirements, and pushing homeownership even more out of reach. State and local programs are great options, but in some cases, they may not be the best fit. Now, there is an additional solution: MEP’s Advantage DPA program.
How does the MEP’s Advantage DPA Program work?
This new program offers 100% financing per FHA guidelines. The MEP Advantage DPA program can be used to get an FHA loan. The second mortgage used for the DPA is up to 3.5% of the sales price or appraised value of the home. There are two options for the DPA loan:
1. DPA Options
MEP DPA Option 1
Option 1 is a second lien with an interest rate equal to the first note rate plus 2%. It has a 10-year loan term but can be payable upon sale, refinance, or payoff. The total loan amount is 3.5% of the lesser of the sale price or appraised value.
MEP DPA Option 2
Option 2 is a second lien forgivable loan with an interest rate of 0%. The payments are deferred, and no interest accrues. This loan is forgivable after 10 years. The total loan amount is 3.5% of the lesser of the sale price or appraised value.
2. FICO Score
The minimum FICO score for this product is 600. Your credit score helps determine the risk associated with lending your money to purchase your home. Credit scores are calculated based on the information on your credit report.
3. No First-Time Homebuyer Requirement
MEP Advantage DPA program does not require that the homebuyer be a first-time homebuyer, but homebuyer education is required by at least one occupying home buyer.
4. Eligible Property Types
The property types that can be purchased using this program include single-family residences (1-unit), duplexes, some manufactured homes (check with your loan officer on this), PUDS, Townhouses, and some condos (check with your loan officer on this). Note: MEP’s Advantage DPA program is not used on 3–4 unit properties.
The MEP Advantage DPA Program is designed to increase homeownership opportunities for low-to moderate income homebuyers. The funds provided through this program can help subsidize the additional money homebuyers need for the down payment and closing costs and may help turn homeownership dreams into reality, even for those facing financial constraints.
While our program may not be right for everyone, our experienced local loan officers can also work with you to secure state funding options. Contact our loan team to learn more about how our down payment assistance programs can help you realize your Rhode Island homeownership dreams.
