If you have been searching for the perfect home and are finally ready to make an offer, you may have some concerns about the down payment. In this difficult economy it can be difficult to pay a large down payment so what are your options? How can you complete the sale if you don’t have extra cash?  

Different lenders have their own minimum down payment requirements and can vary depending on the mortgage program, loan amount, borrower income and credit rating. A good rule of thumb is roughly 20%, but you can find different ways to help you meet down payment requirements, including buyer assistance programs -  also called down payment assistance programs.

Assistance programs and grants can help you avoid robbing your savings or 401K or borrowing the money elsewhere to come up with a cash down payment. Some of the most common buyer assistance programs are for first time home buyers, but other assistance programs are available as well. How do they work? Below are some key requirements of standard programs. 

  • Home buyers must qualify for a loan that allows gift funds from a charitable organization
  • Limits may apply to the price of the home
  • Funds can be used for the down payment and for closing costs
  • Gift funds can be used for new or existing homes

There ae several different organizations that provide buyer assistance, including Grant America, Nehemiah and American Family Funds. Many other buyer assistance organizations are available, so do some homework and talk to your tax preparer and mortgage lender about options.

Always speak to your lender about available programs in your market, they can help you structure the down payment assistance to be compatible with their underwriting guidelines and offer advice on program advantages for your type of loan.