Blogs

Think You Know Down Payment Assistance Plans? Check Out These Facts!

With the current economy as it is, buying a home can be a challenge! Property prices are high, and with many people struggling to make ends meet, saving money for a down payment can seem like an impossible dream! However, it doesn't have to be out of your reach! As Tennessee mortgage professionals, we talk to people every day who believe that they need to have a 20% deposit on hand if they even want to consider buying a home. However, this is actually a very outdated view, especially with the help of down payment assistance programs which are designed to help people just like you to get a Tennessee mortgage and buy the home of their dreams. Let's take a closer look at these programs and the important things you need to know about them!

What Are Down Payment Assistance Programs?

Federal, state, and local governments or private nonprofit organizations fund Down Payment Assistance Programs. They are designed to help prospective homeowners be able to afford a down payment to purchase the home of their dreams. These programs vary from state to state and even between counties or cities. Some of the assistance that may be offered include:

• Grants - Some programs will provide a grant to cover a down payment, which does not need to be repaid.
• USDA, VA and Chenoa down payment assistance program.
• Low-Interest Loans This type of loan must be paid back over an agreed period of time, such as ten years. The idea is to make homeownership more accessible by spreading the cost of the downpayment over a more extended period.

How Does It Work?

If you are looking for a Tennessee mortgage, but are struggling to save the necessary down payment, down payment assistance could provide a solution by offering a grant or loan to cover the cost of a down payment. Depending on the specific program, the applicant may be required to make a minimum contribution. This will vary between different programs and providers.

Who Qualifies For Down Payment Assistance?

Again, the specific guidelines will vary between programs, but as a general rule of thumb, down payment assistance programs are available to first-time buyers trying to get a Tennessee mortgage on a low to medium income. However, different down payment assistance programs have different eligibility requirements. Some programs prioritize certain professions, including teachers, law enforcement, and healthcare professionals. There may also be a minimum credit score that applicants must meet. It is wise to research the available programs where you live and then take a closer look at the qualification requirements for applicants to see if you can apply for the program. Talk with a Tennessee mortgage professional for advice on the best down payment assistance programs in your area.

Pro Tip! If you are not a first-time buyer, don't automatically assume that you won't qualify for down payment assistance programs. Some programs define a first-time buyer as someone who has not owned a home in the past 3 years! It's always a good idea to double-check the requirements, just in case!

Do All Home Types Qualify?

When you are applying for a down payment assistance program to help you get a Tennessee mortgage, there are only certain types of homes that will qualify. Generally, these loans and grants will only be approved for single-family residences. This includes houses, and condos as long as they will be the applicant's primary residence. You cannot get down payment assistance for a second home, vacation house, or investment property. There may also be some other restrictions in terms of the value of the property. Again, this is something you need to research and compare programs since they will each have their own requirements.

Final Thoughts

As noted, it is no longer standard practice for a Tennessee mortgage to need a 20% downpayment. Some lenders will accept as little as 3-5%. It is worth shopping around to see if you can find a lender with a lower downpayment requirement. The Erica Kelley Group, powered by Flat Branch Home Loans, can help you to find one. However, if you can still not raise even this lower downpayment, applying for a down payment assistance program could be the best option to get you on your way to home ownership.

--

Human-Centred Mortgage Loans

Whether you are a Veteran, a first-time home buyer, looking to refinance, or everything in between, Flat Branch Home Loans, The Erica Kelley Group specializes in finding the right home mortgage for you. It is our honor to help you acquire something that is "yours."

Call 615-423-3095 or email ekelley@fbhl.com