Depending on who underwriters your loan and the type of dwelling you purchase, you could be required to put as little as 3 percent or as much as 20 percent down on a home. For many first-time homebuyers, coming up with that much money can be very challenging. However, there are places where you can get help with this aspect of buying a house. Here are two options.
Down Payment Assistance Grants
Possibly the best way to get money to put on a home is through a DPA (down payment assistance) grant. The primary benefit of this program is the money doesn't need to be paid back as long as you meet the program's requirements. Typically, you have to occupy your home for a specific length of time. However, some programs may also have income, employment, or other qualifying factors.
You can obtain down payment assistance grants from a number of organizations. The Department of Housing and Urban Development typically gives money to local and state agencies for dispersal through various programs, such as the Neighborhood Stabilization Program. This program is designed to help communities suffering from high rates of foreclosures and abandonments. The money is typically provided through community development agencies, so you may want to contact your local housing and development organization for more information about qualifying for a DPA grant.
Another place to obtain a DPA is through a private company, such as the National Homebuyer's Fund. These companies tend to work with particular lenders so, at minimum, you would have to get your loan through a bank the company partners with to qualify for the assistance. However, you may be able to get more money than you would through a government program.
A good place to start looking for DPA grants is by searching on the internet, contacting a realtor, or talking to a mortgage representative.
Delayed Repayment Loan
A second option for getting a down payment for a home is to take advantage of a delayed repayment loan. These loans are essentially second mortgages. However, they typically don't have to be repaid for a number of years or when the homeowner takes certain actions. For example, in the California Homebuyer's Down Payment Assistance Program, the money comes due when the homeowner sells the house, transfers the property to someone else (e.g. adult child), or another person assumes responsibility for the house note.
It's important to note that, until the loan is paid off, it does accrue interest. Even though you may not be required to make payments on the loan, you should do so just to keep the interest at a reasonable amount. Also, since these are loans, you must have the credit and income required to qualify.
For more information about these or other programs that can help you put together a down payment for a home, talk to a realtor or mortgage company.