For many first-time homebuyers, saving for the downpayment of a home is not only the first step, but the most significant step toward homeownership. In fact, according to recent research from the National Association of REALTORS®, 38% of first-time homebuyers said saving for a downpayment was the most difficult step in the process and roughly 80% of recent buyers financed their home purchase.
For many first-time homebuyers, saving for a down payment can feel like a big hurdle. However, there are helpful resources designed to make it less challenging including down payment assistance programs.
A down payment assistance program is a financial aid program designed to help homeowners cover the initial cost of purchasing a home, specifically the down payment and sometimes closing costs. These programs can be especially helpful for first-time homebuyers who might struggle to save for a down payment.
Some advantages of these loan programs include:
Lower Upfront Costs: Down payment assistance programs help reduce the initial amount of money needed to buy a home. This can be particularly beneficial for first-time home buyers who may not have significant savings.
Increased Home Affordability: With assistance covering part or all of the down payment, buyers can afford to purchase homes that might otherwise be out of their financial reach. This expands the range of properties they can consider.
Improved Financial Flexibility: By reducing the amount of personal savings required for the down payment, borrowers can use more of their funds for other expenses, such as moving costs, home repairs, or emergencies.
Potential for Better Loan Terms: Having a larger down payment, facilitated by assistance programs, can sometimes lead to better mortgage terms, such as lower interest rates or the elimination of private mortgage insurance (PMI).
Support for Moderate-Income Buyers: Many down payment assistance programs are specifically designed to help low- to moderate-income buyers, providing a pathway to homeownership for those who might otherwise be unable to afford it.
Despite their significant benefits, down payment assistance programs often remain under the radar for many potential homeowners. These programs can offer the solutions needed to bridge the gap, enabling prospective homebuyers to achieve what might otherwise seem out of reach.
There are many times of downpayment assistance programs and loans each tailored to meet different needs. By exploring these options, first-time homebuyers can find the right support to make their dream of owning a home a reality.
Grants: These are gifts that do not need to be repaid. They provide immediate financial relief to cover part of the down payment.
Forgivable loans: Generally, these loans offer conditional forgiveness over a set period, usually between 5 and 10 years. If the homeowner remains in the home for the required duration, the loan is forgiven and does not need to be repaid.
Deferred payment loans: Repayment for these loans is typically deferred until the home is sold, refinanced, or the mortgage loan term ends. They provide upfront assistance without immediate repayment obligations.
Low-interest loans: These repayable loans have low or zero interest rates and are repaid in monthly installments over a set period, often coinciding with the primary mortgage term.
How down payment assistance programs help homebuyers:
Keller Home Loans is revolutionizing the landscape with its OnePlus mortgage loan program, offering a groundbreaking opportunity for buyers to secure their dream homes with just a 1% down payment. Here’s how these innovative programs can make homeownership more attainable and affordable.
OnePlus Mortgage Loan
The OnePlus mortgage loan from Keller Home Loans stands out by requiring only a 1% down payment, significantly reducing the initial financial burden for home buyers. Exclusive to single-family residences, this program allows buyers to qualify with a credit score of 620 or better and an income less than 80% of the Vermilion County HUD income limit.
With the option to combine a 2% grant, the initial down payment can reach up to 5%, making homeownership more accessible. While a maximum purchase amount of $350,000 applies, the program does require private mortgage insurance (PMI), ensuring buyers can secure their ideal homes with minimal upfront costs.
For first-time home buyers looking to further ease financial strains, Keller Home Loans offers the Purchase Plus program. This initiative provides up to $5,250 toward down payments and closing costs, helping buyers manage expenses more effectively.
Purchase Plus goes beyond financial assistance by offering lender credits that can be combined with gifts and other acceptable funds, allowing for greater flexibility in covering upfront costs. With a modest 3% down payment requirement, this program is designed to overcome financial barriers and empower buyers to achieve their homeownership aspirations.
Purchase Plus is available to first-time home buyers in select metropolitan areas across the United States, including Atlanta, Oklahoma City, Baltimore, Chicago, Dallas-Fort Worth, Houston, Miami, Memphis, and more. Eligible clients must reside in one of these specified metro areas at the time of application, with the purchased home located anywhere in the country.
Keller Assist Program
The Keller Assist DPA program is an attractive option for homebuyers as it offers 100% financing for an FHA loan, eliminating the need for a down payment. However, it’s important to note that closing costs will still apply.
This program eliminates the need for a traditional down payment, making it an attractive option for those who may not have substantial savings for upfront costs. Keller Assist utilizes a combination of a first and second mortgage, with the second mortgage amounting to a maximum of 3.4% of either the sale price or the appraised value, whichever is lower. The secondary loan carries a term of 10 years, ensuring manageable repayment schedules for qualified borrowers.
To qualify for Keller Assist, applicants need a minimum FICO score of 600 per borrower and must meet FHA approval standards. Unlike some programs, Keller Assist does not require applicants to be first-time home buyers, offering accessibility to a broader range of prospective homeowners.
Homeowner education is required, including completion of the Fannie Mae HomeView course, which is available at no cost. Keller Assist follows agency guidelines for underwriting and is available in 47 states, excluding Massachusetts, New York, and Washington state.
Learning about the benefits of down payment assistance programs opens doors for many prospective homebuyers who face financial challenges in achieving homeownership. These programs not only alleviate the initial financial burden by reducing upfront costs but also aid in affordability, improve financial flexibility, and potentially offer better loan terms.
Whether through innovative solutions like the OnePlus mortgage loan, Purchase Plus program, or Keller Assist, these offerings represent a pathway toward sustainable homeownership and financial empowerment for many across the United States.
