If you are a first-time homebuyer, it is hard to acquire enough cash for a down payment. At this time, the contribution of the down payment assistance program in your life is remarkable. Generally, the experts suggest that you should put at least 20% of the loan value. When you are unable to do so, the program comes forward. With this option, you can get a particular amount of money for the qualified borrower. Utilizing the amount, a future homeowner can cover the closing costs or down payment. However, there are many people still unknown to this program.
The amount received through the program can be regarded as a debt to pay off in the future, an interest-free mortgage, and a grant. You can use down payment assistance to purchase homes in Texas and avoid repaying the money for a particular period. The program is considered to be important because many adults living in rented places have been able to acquire homeownership finally. Without a doubt, the assistance program provides much-needed help in overcoming the obstacle. If the concept is new to you, there are several things to keep in mind. Let’s take a look below.
Being Eligible for Down Payment Assistance
It is essential to remember that everyone cannot pass the eligibility test for down payment assistance. The rules usually vary from one state to another! So, the first layer of eligibility depends on how much you are earning and how much the house costs. Moreover, many of the programs are only restricted to first-time homebuyers. In any case, if you have acquired a home, you might not get a green signal. At such times, you should contact a lender to understand the mortgage process and go through the financial responsibilities of purchasing a home.
Understanding the Process of this Program
The down payment assistance program helps the borrower in different ways. You can opt for low-interest loans that are repaid over a particular period. The option makes homeownership more feasible. Additionally, there is a zero-interest forgivable loan in which the borrower does not need to repay as long as the borrower owns and lives in the house after the particular period is over. The terms and conditions for zero-interest deferred payment loans differ. Also, you can make use of the grants that act as a gift of money.
Down Payment Assistance Unavailable for an FHA Loan
It is quite difficult to grasp whether down payment assistance for an FHA loan is possible or not. One of the rules in the handbook discloses that the amount paid for the closing cost is not considered as a component of an applicant’s least needed investment. So, the down payment funds should be paid independently from the closing costs and other expenditures. If there is any gift provided to the homeowner for the closing costs, it cannot be counted as a part of down payment assistance. The limit for the FHA mortgage contribution is 6%. When the percentage goes higher than this, the part is counted as inducement purchase. In a nutshell, down payment assistance is not available for an FHA loan.
If you are wondering more about this beneficial program, you should get in touch with an FHA loan.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.