Learn about all the different resources available for First-Time Home Buyers, including grants and deferred payment loans for closing cost and down payment assistance.
Generally, all down payment and closing-cost assistance programs offered to first-time home buyer's are often in the form of second mortgages, which can either be deferred or non-deferred. Meaning a deferred loan will not require any monthly payments to be made, while a non-deferred loan will require a regular monthly payment. However, deferred payment loans are still required to be paid in full. There can be instances where the balance of the loan is forgiven if you own the home for a certain period of time, but typically if you sell or refinance the original loan you will need to repay the assistance loan at that time - subordination may also be an option.
Down payment assistance (DPA's) can also be at times difficult to qualify for as they can have higher than normal credit requirements and many times carry specific income limits depending on the county you will live. Furthermore, depending on the DPA you choose, you may be required to use that agencies lender for your first mortgage on the actual home, in which case can sometimes carry a higher interest rate.
DPA programs can be very beneficial for low to medium income earning households with good credit, low debt, and little to no money down. Fannie Mae also allows lower coverage limits on private mortgage insurance for borrower's utilizing first-time home buyer programs, which can also assist in qualifying. You will be required to attend a home buyer's counseling seminar - other than that, your typical involvement in the program should not exceed $1000.
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