These days, buying a home usually involves taking out a mortgage loan and spending money on down payments. Mortgage lenders will pre-approval your loan if you could cover some of the costs of a home’s full purchase price. Fortunately, even if you don’t have your own money to pay for the down payment, you can take advantage of down payment assistance programs that some institutions can offer. If you are looking to purchase a home with down payment assistance, keep the following in mind:
Know if you Meet their Income Requirements
Providers of down payment assistance tend to have income requirements but if your income doesn’t meet their requirements, don’t be discouraged. Focus on showing your ability to afford the loan by yourself. Think about bringing in a side income for at least two years and count this on your mortgage application. For more information, read OnQFinancial: down payment assistance: a blog post.
Save Up some Money
Even if you are getting down payment assistance, try to show that you can still afford to finance a house. Mortgage lenders will wish to know you have some cash reserves and can pay for the remaining closing costs. Remember that there might be unexpected expenses which will show up when you purchase a house.
Prepare to Meet their Other Requirements
Down payment assistance is not something you can just take down and run off with. A number of programs will require you to complete homeowner education classes. If you use this assistance for an FHA loan, you may have to negotiate home repairs with the property seller to have some problems taken care of before you get your loan and assistance funding.
Take time to read the fine print and meet the requirements of your chosen down payment assistance program. Even after you get the assistance, you may still have to adhere to some requirements. For instance, some assistance may be fully forgivable if borrowers can maintain the same loan for a minimum of five years.
Getting a down payment assistance can help turn your dream of owning a house into a reality. But, make sure you weigh down the pros and cons. While you may get the amount of money you need for a down payment, you will have to pay for an interest. If you are interested in down payment assistance, talk to a lender or find credible programs in your state and make sure you read the requirements and conditions first before you give it a go.