The down payment is the biggest barrier to home ownership. Or so many believe. A Zillow survey found that about two-thirds of renters in 20 major metropolitan areas think down payment requirements stop them from buying a home. But they shouldn’t. There are options.

An Assistance Overview

There are a wide range of federal, state, and local programs that help with down payments. Thousands of them! Many assistance programs are designed for first-time homebuyers who have moderate incomes, though repeat buyers can also qualify. Most programs are for primary residences and often include single-family homes, condos, townhomes, and other property types.

Types of Assistance Programs

Grants. You don’t have to repay these cash funds, which can go toward a down payment and closing costs. A homebuyer grant could come from a non-profit or another organization.

Forgivable Loans. Similar to a second mortgage and a grant, zero-interest forgivable loans may not need repayment. They often require the borrower to live in the home for a specified time, usually from three to ten years. Over that period, in most cases, the loan is incrementally forgiven.

Low-Interest Loans. These work like second mortgages, but usually with more attractive fixed interest rates. Borrowers often need to repay low-interest loans within ten years.

Deferred-Payment Loans. These differ from low-interest loans in that they generally don’t charge interest. Often, payments aren’t due but rather deferred until the borrower sells the home or refinances the mortgage. You only pay back the amount borrowed, no matter how much time passes.

Individual Development Accounts. With an IDA, also known as a matched savings account, private or public money matches the contributions of the account holder. A borrower can use this IDA to cover their down payment and closing costs.

Finding Down Payment Assistance Programs

Most assistance programs are at the state and local levels; that’s where the search should begin. The U.S. Department of Housing and Urban Development (HUD) lists home-buying programs by state. The Dallas Homebuyer Assistance Program offers options. You can search city and county websites for their assistance programs. And take things offline. Old-fashioned phone calls to local agencies could yield surprising results.

Don’t let fears of a down payment stop you from achieving your dream of home ownership. To find out more about payment assistance options, get in touch with a member of the Decker Group online or call us at (972) 591-3097.