Sometimes, it’s just tough to save enough for a downpayment to buy a home.
Saving for a downpayment is one of the top barriers to homeownership, along with other hurdles including qualifying for a mortgage and job security.
Yet, free money in the form of grants does exist across the country for those in need of downpayment help. In fact, The Down Payment Resource in Atlanta reported in a second quarter report this year that 69 percent of the programs in its database are strictly for down payment or closing cost assistance.
States with the greatest number of downpayment programs continue to be California, Florida and Texas.
If you think the money is only for those buying a house for the first time, you’d be mistaken – thirty-seven percent of these homeownership programs don’t require that you be a first-time homebuyer.
Downpayment assistance programs can come from State Housing Finance Agencies, cities and counties, housing authorities, non-profits and employers.
Here are a few examples of people living their dream of owning a home because they took advantage of down payment assistance programs:
Upper Fells has become a popular area for Baltimore professionals. Sometimes, it’s tough for a young professional to even afford the rent in that area.
In fact, Mary, an elementary school teacher, couldn’t afford the rent. But she ended up buying a house because local banks in Baltimore are now offering portfolio products to low income individuals that have zero down when combined with a city grant.
Mary was able to get a $5,000 grant called the City Living Starts Here. It covered most of her $7,200 downpayment with the remainder coming from a gift from her father.
She was required to attend a homeownership counseling class and submit a ratified contract within 10 days of completing the training. This particular grant has no income requirements.
Her dream home became a row home for $239,900, with two bedrooms, 2.5 baths and 1,300 square feet. The front porch swing invites you into a living room featuring a brick fireplace original to the home. Exposed brick walls and hardwood floors add a touch of rustic and modern appeal. She found the home through AE Home Group, a local real estate agency.
Mary signed a 30-year fixed loan at 3.625 percent and has a monthly payment of $1,523. If she would have rented the house she bought, the price would have been $1,775 – without gaining any equity at all.
A yard for play time
Alaysyah Yahyisrael needed more space for her family and a yard for her dog.
But at age 24, she didn’t think saving for a downpayment for a house was possible.
She wanted to stay near her neighborhood in Cincinnati, Ohio, since it was close to her 3-year-old son’s day care center and a short commute to her job at Fed Ex. She also cherished having close family and friends.
Getting a manageable monthly payment would help, too.
“But all the houses all seemed too much – too much money, too much of a down payment and too much in taxes,” she says. It seemed like it wasn’t going to work out.”
After meeting with her realtor and her Fifth Third Bank mortgage loan originator, the light at the end of the tunnel began to shine.
She qualified for Fifth Third’s Down Payment Assistance program which offers 3 percent of the purchase price in downpayment assistance up to $3,600 for low-income borrowers or those purchasing in a designated low-income area and financed through the bank.
Fifth Third’s program also can be combined with state and local programs to help consumers take advantage of grants and other money for their down payment. Alaysyah’s loan officer helped her qualify for two other programs.
A neighborly gesture
A few years ago, Yolanda Rambert-Marshall of Jersey City, N.J., felt like she won the lottery. She was able to qualify for the Neighbor Next Door Homeownership Program. They gave her $27,000 for a downpayment on her home.
“I didn’t have to pay any closing costs, either. I did have to pay for my lawyer and housing inspection,” she says.
The program was so helpful that she has been telling people all about it . Her sister-in-law and brother are currently enrolled in the program and looking for that perfect house.
“You must attend first-time home classes and get a certificate to prove that you completed the courses,” Rambert-Marshall explains.
She purchased a two-family home so she could rent out the other side for income.