Can't Afford to Buy a Home? Have You Considered Down Payment Assistance?
What's the number one hurdle for renters making the leap to homeownership? That pesky down payment. Even with an FHA loan that only requires a minimum of 3.5% down, the thought of setting aside several thousand dollars is daunting (and for some, darn near impossible).
A survey from Apartment List highlights the struggle for millennial renters, with 62% citing a lack of down payment savings as their reason for delaying homeownership. 48% have zero down payment savings, and just 11% have saved $10,000 or more.
Fortunately, there are programs out there to help, they're just not always well publicized. Here are some tips for finding Down Payment Assistance:
1. Do a national search.
You'll be surprised how many programs you can find. "Do you even know that down payment assistance (DPA) programs exist? You're in good company if you don't," says The Mortgage Reports. "These programs help homebuyers with loans or grants that reduce the amount they need to save for a down payment. And there are more than 2,000 of them nationwide."
2. Check out statewide programs.
From the HUD site, you can search by every state plus the District of Columbia, Puerto Rico, and the U.S. Virgin Islands to see which programs are available for you.
Also check these statewide MN programs:
When you get a Minnesota Housing mortgage, you can also receive an optional downpayment and closing cost loan up to $15,000.
USDA (Rural Development) loans with 0% downpayment! This program assists approved lenders in providing low- and moderate-income households the opportunity to own adequate, modest, decent, safe and sanitary dwellings as their primary residence in eligible rural areas.
3. Now take it local.
Don't forget to check for programs in your city. Check out Minneapolis Homebuyer Down Payment Assistance. City of Minneapolis down payment assistance is available for purchasing a home in the City of Minneapolis. See program details for income and/or geographic restrictions.
Non-City resources for homebuyer assistance:
Neighborhood Revitalization Program: some neighborhood organizations offer down payment assistance, contact the neighborhood your potential home will be located in to learn more.
4. Search by your profession.
You've probably heard about VA loans for military members and veterans, but there are other professions that are eligible for down-payment assistance. The Neighbor Next Door Program is a program for law enforcement officers, firefighters, emergency medical technicians, and teachers that requires only a $100 down payment for eligible homebuyers. Because the program is tied to the idea of revitalization, homes in these communities are offered to eligible buyers at a 50% discount.
5. Check with your real estate agent or lender.
Doing your own research is key, but it's always smart to consult a professional who is familiar with your specific situation.