Designed to make the process of home buying easy and effective, down payment assistance programs helped various homeowners to fulfill their dream of homeownership by offering the amount for down payment or closing cost. Come in the form of grants, gifts, or something else, down payment assistance programs are offered by the state government, city, or something else.
Though there are several advantages of opting for down payment assistance to purchase homes in Texas, the myths about these programs may prevent you from making a wise decision. To help you, here we have listed down a few myths and facts –
Myth 1: Down payment assistance programs make home financing complicated
Your home purchase is likely the largest purchase that you will ever make. So, you want make a wise financial decision and get it right – isn’t it? When you apply for and then use a down payment program to buy a home, it does need additional paperwork. However, the paperwork is like to what you are already doing when applying for a mortgage.
Lenders who offer down payment assistance programs are qualified to write the loans associated with the programs and understand how to add this special financing into the home loan without complicating the real estate transaction. This is why; it is vital to seek information about available programs before getting pre-qualified.
Myth2: The assistance is only compatible with FHA loans
While FHA loans are generally used with down payment assistance, it does not mean that other loan products are off the table. Nowadays, you can find flexible down payment requirements with FHA and conventional financing. Various down payment assistance programs are compatible with VA, FHA, USDA, and conventional loans. But how do you know what will be the best fit for you?
It comes down to purchase price, as well as assistance amount. But if you have $10,000 in assistance on the same $150,000 house, which brings you to more than 6% down and may help reduce your total monthly payment, loan fees, and mortgage insurance. Keep in mind that there are various factors to consider. So, ask your mortgage lender for different loan options, compare them, and then make a wise decision.
Myth3: These programs are only for low-cost homes
No, it is not true. These down payment assistance programs are not just for narrowly defined homebuyers, as well as “targeted” neighborhoods of very inexpensive homes. Generally, homes in any neighborhood may be eligible with sales price limits ranging from $200,000 to over $700,000 in high-cost markets. Besides, some homebuyers can have income limits of up to 120 percent of the area’s median income and higher that can amount to over six-figure incomes in countless markets across the country.
Additionally, some may offer tiered down payment assistance dollars at several income levels, so higher income isn’t always an automatic disqualifier. Income limits depend on the household size, so limits for a family of five are significantly higher than for a single person.
So, without paying attention to the misconceptions, check various down payment assistance programs, and opt for the right one now!