Bridging the Gap to Homeownership with FHA Down Payment Assistance Programs & Conventional Loan Programs

Today’s blog is a follow-up to last week’s blog, Opportunities for First-time Homebuyers in 2023. If you did not have a chance to read last week’s blog, I would suggest you do so. It is a quick and informative read.

I will discuss the benefits of FHA down payment assistance programs for anyone who is FHA qualified to purchase a home. Or who are looking for a Conventional loan program to help ease the burden.

Purchasing a home is a dream shared by many, but for some, the task of saving for a down payment can be overwhelming. Fortunately, there are nationwide programs available to assist, particularly through the Federal Housing Administration (FHA), state-sponsored assistance programs, and programs offered by local counties and cities. These programs aim to make homeownership more accessible by offering down payment assistance to qualified individuals, as I mentioned in last week’s blog.

Below are examples of assistance you should be looking for as a borrower, a real estate agent, or as an MLO. Having a list of DPA programs available for potential clients is a great way to get referrals from clients.

Down Payment Assistance Subordinate Mortgage (DPA Second)

A DPA Second offers a loan to qualified first-time homebuyers and homebuyers who have previously owned a home. When combined with a First Mortgage, a homebuyer can purchase a home with little or no cash investment.

FHA or VA Financing (First Home)

This loan program is designed for families with lower incomes and a credit score of 660 or higher who are first-time homebuyers and will occupy the home. This program offers lowered interest rates and more affordable monthly mortgage payments.

FHA or VA Financing FHA/VA Mortgage

This loan program is designed for families with lower incomes and a credit score of 660 or higher who are first-time homebuyers and will occupy the home. This program offers the lowest interest rates and more affordable monthly mortgage payments.

Grant Programs

Grant programs can offer no repayment requirement and are usually designated for U.S Veterans, Law Enforcement, and FTHB (First Time Homebuyers). These grant programs are well worth an MLO or real estate agent’s time to find & register for in your state, region, or nationally.

Conventional

These loan programs such as Freddie Mac’s HFA Advantage & Borrower Smart programs are not your traditional DPA but are just as good as FHA DPA. These programs are conventional loan programs that require a slightly higher credit score and carry a slightly higher interest rate but a lower monthly mortgage insurance premium than FHA programs. Conventional loans will require MI (Mortgage Insurance) if less than 20% is used for the down payment. Usually, these loans are offered as first mortgage loans to qualified Freddie Mac first-time homebuyers and homebuyers who have previously owned a home.

As you can see, there are many if not countless FHA DPA, Grant, and Conventional opportunities for FTHBs and non-FTHBs alike. This is another reason why it is important to find an experienced Mortgage Advisor, such as myself, to inform and help you throughout your home-buying, refinance, and HELOC or second mortgage transactions.