Securing the money for a down payment is often one of the biggest challenges for first-time home buyers. Down payment assistance programs are loan programs intended to help first-time home buyers with their down payment. There are many loan programs available that offer flexible down payment options for potential home owners. These mortgage loans are not just for low income homebuyers; there are down payment assistance programs available for those who make up to 120% of the average income in the area.
FHA loans offer borrowers low down payments and allow for gift money to go towards the down payment. Since credit is not a large factor in obtaining an FHA loan, rates are usually lower and refinancing is easy. These loans have a cap to how much you may borrow and have strict appraisal guidelines. The loan qualification process may be time consuming, but the money you’ll save will be worth it.
VA mortgage loans are government insured loans that are available to military veterans, military personnel, and widows or widowers of veterans. Although VA loans are sold by private lenders, the VA guarantees the loans in case the borrower defaults. VA loans have very low down payments for those who qualify, with some VA mortgages requiring no down payment at all. There are caps to how much you can borrow on these loans as well.
The USDA insures loans with flexible financing for low and very low income buyers in rural neighborhoods. There are a number of benefits to obtaining a USDA loan, including loan and grant programs to fund repairs and renovations. USDA rural loans are available to disabled, elderly, and low income residents of multi-unit housing, in order to help them pay their mortgage. However, USDA loans are not just for rural areas. Many properties may be eligible for a USDA loan, even ones you might not expect.
Reverse mortgages, also known as home equity conversion mortgages (HECM), were designed for elderly borrowers who have a significant amount of equity in their homes. The idea is that they can turn their equity into cash to increase their monthly income. The owner receives payments from the equity built on the loan. Any payments owed to the owner of the reverse mortgage in the case that he/she passes away will be transferred to the next of kin. Be careful when taking out a reverse mortgage, because the loan must be paid in full if the borrower moves out of the house for any reason, including unforeseen health problems.