Down Payment Assistance Programs Help First-Time and Repeat Buyers

You want to buy a home, but can't cover the down payment and closing costs. Don't worry -- if you qualify, state housing finance agencies offer programs that may help you cover closing costs and down payments. The National Council of State Housing Finance Agencies offers a directory of these agencies. Real estate professionals and mortgage lenders can help you determine if you're eligible for these programs.

Owned a Home Before? You May Still Qualify

In general, first-time homebuyer programs sponsored by state housing finance agencies (HFAs) define first-time buyers as anyone who has never owned a home or who has not owned a home within the three years prior to applying for a state housing finance agency home loan program. Others may also qualify; for example, displaced homemakers or single parents who owned a home with an ex-spouse may also be eligible.

How HFA Down Payment Assistance Programs Work

HFA programs typically provide a "silent" second mortgage of the lesser of three percent of the appraised value or purchase price of the home being mortgaged. If the home you're buying is appraised and priced at $150,000, the maximum second mortgage amount from a state HFA program would be $4,500. A "silent" second mortgage does not have to be repaid until the borrowers sell or otherwise vacate the home.

HFA down payment assistance programs can be used in connection with FHA loans. Contact LendingTree's network of FHA lenders to learn more.

Mortgage Lenders Approve HFA Loans

Mortgage lenders participating in state housing finance programs verify borrower eligibility, including applicable income limits and completion of required homeowner education.They underwrite and fund home loans connected with state housing finance agency programs. HFA-approved lenders also work with real estate professionals and communities to provide information about HFA programs and ensure that homebuyers complete required education or counseling programs.

HFA Loans: Owner Occupancy Requirements

HFA programs are intended to help first-time buyers achieve homeownership and require that the owners use the properties as their primary residences. Although circumstances can change, it's a good idea to consider your current situation and future goals to determine if an HFA home loan program matches your needs and plans.

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