Down Payment Grants
Did you know that nonprofit organizations like Partners in Charity and the Genesis Program provide from 1 to 10 percent down payments, up to $22,500? While the qualifications vary according to program, each program requires that buyers qualify for financing with their lender. Other requirements may include completing a Home Ownership Counseling course, or that the home buyer provides 1 percent of their own money. Sellers are sometimes asked to contribute as well.
In Florida, the state has grant programs that vary by county - up to $15,000 for first time home buyers, and Florida Housing also offers down payment and closing cost assistance in the form of a second mortgage loan. These programs were created to assist eligible homebuyers with their down payment and closing costs - emphasis on "eligible" most lenders require the borrower to qualify for standard loan before applying for the grant. Also, be aware that down payment assistance is only available when used in conjunction with Florida Housing's first mortgage loan.
Sellers benefit as well from these programs. By broadening the pool of potential homebuyers, grant programs help sellers and lenders sell homes faster than they might otherwise with a smaller group of eligible buyers. In effect, down payment grant programs bring more buyers to the marketplace.
As you might expect, many programs have income/asset restrictions, recapture clauses, reserves required or geographic boundaries.
Down payment assistance programs generally participate with FHA, conforming and jumbo loan products, and can be used for single family homes, manufactured/modular home, condos, townhomes, existing or new construction, rehab and jumbo.
Most of the programs don’t underwrite the loan or add any cost in the form of points or fees. They just provide the gift for the down payment and/or closing costs.
These programs were developed to assist buyers who had never qualified before during the glut of inventory following the housing crisis of 2007/2008 but the assistance is still available - a great resource!
Partners in Charity (PIC):
l Provides 2 to 10 percent down payment.
l No cash investment required of the buyer.
l No extra qualifying after mortgage lender approval.
The Genesis Program
l Homebuyers are not required to provide any of their own money.
l Sellers are required to put up a contribution equal to the gift amount provided by Genesis to the home buyer (1 percent of the contract sales price or $750 whichever is less).
l Buyers are automatically qualified for a gift from Genesis if they purchase a Participating Home (a home in which the seller has entered into a participating home agreement with Genesis Housing Development Corp. The Participating Home Agreement outlines the contribution the seller makes to Genesis and its use.) and obtaining financing through an eligible loan program.