What is Down Payment Assistance?
Of the many steps to homeownership, the one that is often the most difficult for credit-worthy first-time homebuyers is coming up with funds for a down payment and closing costs. For example, borrowers with high student loan payments or low to middle income may not have extra cash to set aside to save for this exciting milestone.
In response to this common challenge, many states, cities, and towns have developed down payment assistance programs to provide the funds needed to make homeownership possible.
Florida Housing
Florida Housing offers many down payment assistance programs for residents of Florida who want to purchase homes in their communities but may not have the required funds for down payment and closing costs. FL Housing has programs that offer down payment assistance in the form of a second loan when used in conjunction with Florida Housing’s first mortgage loan, which is available only through authorized lenders.
FL Housing programs include:
The Florida Assist (FL Assist)
- Offers up to $10,000 on FHA, VA, USDA, and Conventional Loans
- 0% non-amortizing, second mortgage
- The Florida Homeownership Loan Program (FL HLP) Second Mortgage
- Offers $10,000
- 3% fully amortizing second mortgage
- 15-year term
3%, 4% and 5% HFA and HFA Advantage Plus Second Mortgage
- 3%, 4%, 5% of the total loan amount
- Forgivable Second Mortgage
- Special terms for repayment apply to these loans
South Carolina Housing
South Carolina Housing (SCHousing) assists low to moderate-income families and individuals by offering fixed-rate first mortgages through approved SC Housing lenders and a down payment assistance program to help pay for the down payment and closing costs.
Borrowers must meet the qualifications for the first mortgage under SC Housing’s guidelines to be eligible for down payment assistance. Funding is based on availability, so be sure to have your loan officer check before applying. Borrowers must attend a homebuyer’s education course, and the properties must meet eligibility guidelines and be located in South Carolina.
SC Housing offers a forgivable down payment assistance option to all qualified borrowers. The DPA may only be used toward a borrower’s down payment and closing costs. Borrowers must meet sales and income limits and SC Housing’s first mortgage requirements. SC Housings DPA is a second mortgage with a fifteen-year term. The interest rate is 0%, and there are no monthly payments. The borrower must occupy the home for 15 years for the assistance to be fully forgiven.
Down payment assistance programs can give homebuyers the extra push they need to overcome financial obstacles to homeownership. As with most financial assistance, there are hoops to jump through, but in most cases, it is worth it if you genuinely want to achieve the dream of homeownership. All of the programs mentioned in this article have additional guidelines and requirements that must be reviewed with you by a qualified mortgage loan officer in your area before applying. Working with an approved lender and experienced loan officer will make the process much easier and help you on your way!
