Additional Information on Homebuyer Assistance Programs
What Are Homebuyers Assistance Programs?
There are a number of different programs available to help first-time homebuyers. For example, in an Individual Development Account (IDA) program, participating organizations match your savings contributions to help you save for a down payment or closing costs.
These programs typically require that you complete financial education classes.
Many cities and local governments offer homebuyer assistance programs, especially for people with lower incomes. Financial institutions may also offer special loan products to help you become a homeowner.
- Ask your lender or local government about the homebuyer assistance programs they offer.
- Ask local real estate agents about special programs.
- Check with a local Housing and Urban Development (HUD)-approved homeownership counseling agency.
Characteristics of Government Programs
Federal, state, and local governments offer many types of home loan programs. Federal Housing Administration (FHA) and Veteran Affairs (VA) are just a few of the many home loan programs offered by the Federal Government. Each home loan program has specific eligibility requirements, and not everyone will be eligible.
Benefits of these programs vary, but may include:
- Low down payment requirements
- More flexible underwriting standards in which the lender will consider non-traditional forms of credit history (e.g., rent or utility payments), and higher ratios of debt compared to your income
- Longer payment terms than typical mortgage loans
- Note: your monthly payment will be lower, but the mortgage will take longer to repay and you will pay more in interest over the life of the loan.
- Homeowner education requirement
- Homeowner education programs help you understand the home buying process, budgeting, finding a home, getting a loan, and maintaining a home. Many HUD-approved homeownership counseling agencies offer these classes.
Some restrictions to these programs may include purchase price limitations, service charges, and higher loan origination fees.