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Saving for a down payment can make owning a home quite challenging for many people, but there are programs available to help bridge the gap between taking that first step and homeownership. Most major cities and states throughout the country offer down payment assistance programs. These programs are designed to help people who may not be able to afford to buy a home due to insufficient down payment or funds for closing costs.
With almost 1,000 different programs operating nationwide, our mortgage loan officers who specialize in down payment assistance can help qualified borrowers find a program that will work with their primary loan.
Types of Programs
There are many different types of programs, but the two most popular are down payment assistance and resale price restrictions, also known as inclusionary zoning:
- Down payment assistance: These programs provide money to assist homebuyers in the purchase of a house.
- Resale price restrictions: For some homes, the zoning authority sets the maximum sales price of the home to make it affordable for more families.
How it Works
Most programs receive federal funding, which they then provide to qualified borrowers through loans, grants, or by subsidizing the sales price of a home. Each housing agent has the ability to structure their programs based on the greatest need of the community they serve. Because funding is limited, our affordable lending specialists keep in close contact with local housing agents, so they can refer our customers to where programs are available.
Each program has a different way of structuring the repayment process. Some lend money to buyers at such a significantly reduced interest rate (in some cases, as low as 0%) that the buyer pays it back along with their primary loan. Others lend the money and forgive the debt depending on how long you live in the home. If you receive a grant, you might never be asked to repay.
Most programs have income criteria that are based off the local median income. Some are set up to assist people making anything below 120% of the median. Others set the cap at 80% or anywhere in between. This will vary depending on the program and location.
To get an idea of what the median income is in your area, visit the Fannie Mae Median Income Search tool.
Government agency homebuying assistance is a great resource for both prospective homebuyers and people involved in the business like realtors, builders, and community group activists. If you're looking to buy a home and need help making your down payment, talk to a Bank of America mortgage specialist about what programs you may qualify for. Ask an associate at your local banking center to direct you to an affordable lending specialist in your area if you want to find out about programs that can help the people you serve.
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