Try These First Time Home Buyer Mortgage Down Payment Assistance Programs & Grants

If you’re a first-time homebuyer, you know that the idea of saving enough for a down payment on a home can feel impossible. Even if you’re naturally a frugal person, it can be overwhelming to think of saving thousands of dollars.

At Addition Financial, we work with first-time homebuyers all the time, helping them understand the ins and outs of the mortgage application process. One thing we’ve noticed is that many first-time buyers don’t know that down payment assistance programs exist – and that they may be able to qualify.

There are federal programs as well as state programs. In fact, Florida homebuyers can take advantage of a particularly robust assistance market, with options for both loans and grants. We asked our financial experts for their recommendations and included some of our own favorites.

Fannie Mae HomeReady Loan

The Federal National Mortgage Association, more popularly known as Fannie Mae, has several homebuyer assistance programs for first-time homebuyers. Jeremy Gamble of SimpleShowing says:

“To lower your down payment, it is best to do your research and see which assistance programs are available in your state. Fannie Mae offers a HomeReady loan to first-time homebuyers that requires a down payment as low as 3%. In addition, VA loans and FHA loans are common 0% to low-rate mortgage options.”

The ideal HomeReady Loan candidate is someone with low income, a credit score of 620 or higher and limited cash for a down payment. The program is available for both first-time and repeat homebuyers. Read more about it on the Fannie Mae website.

Fannie Mae HomePath Ready Buyer Program

Another Fannie Mae program that we sometimes recommend is the HomePath Ready Buyer Program, which financial expert David Bakke of DollarSanity also suggested as a resource. He says:

“Fannie Mae also offers what's called the HomePath Ready Buyer program which can as much as 3% of the purchase price of the home, provided you qualify.”

To qualify, at least one of the parties involved in the purchase must complete the HomePath Ready Buyer course and receive a certificate. The course teaches important financial information about homeownership. When you earn your certificate, you’ll simply present it to your real estate agent and work with them to ensure you meet the other requirements. You can learn more about it here.

Florida Assist

FL Assist is a program offered by the Florida Housing Finance Corporation (FHFC) that is specifically for first-time homebuyers in Florida. This is a program we’ve recommended to our members, and it was also mentioned by financial expert Chris McDermott of Jax Nurses Buy Houses.

McDermott says:

“The Florida Assist (FL Assist) gives eligible borrowers in select counties up to $7,500 to be used towards down payment and closing costs. This $7,500 is given in the form of a second mortgage at 0%, deferred over 30 years. It must be paid back if the home is sold before 30 years.”

We realize that getting a second mortgage when you first buy a home might be confusing to some people. It’s not a traditional second mortgage, but it uses the value of the home as collateral and you will need to pay it back – in other words, it is not a grant.

Take our first-time homeowner readiness quiz!

Florida Homeownership Loan Program Second Mortgage

Another program offered by the FHFC is the Florida Homeownership Loan Program Second Mortgage, which offers up to $10,000 in down payment assistance in the form of a second mortgage. This program differs from FL Assist in some significant ways. Specifically:

  • The mortgage granted is for a 15-year term
  • The homeowner must make monthly payments
  • This is a fully amortizing 3% second mortgage

Because of the monthly payments, the FL HLP may affect your debt-to-income ratio. Any unpaid balance will come due upon:

  • The sale of the initial mortgage
  • The payment in full of the initial mortgage
  • Transfer of deed
  • Refinancing of the property
  • Abandonment of the property

In any of these circumstances, the balance would be due immediately. You can learn more about it here.

Salute Our Soldiers PLUS

The final program offered by the FHFC is specifically for active-duty and military veterans. It’s called Salute Our Soldiers PLUS, and it works in a way that is like the other two programs we have mentioned, but it has a hew special features that make it ideal for military members and veterans:

  • Assistance is granted as a 0%, 5-year amortizing mortgage that is forgiven at 20% per year.
  • Qualifying service members or veterans may receive 3%, 4% or 5% of the purchase price as assistance toward the down payment or closing costs.
  • The loan comes due if the house is sold or refinanced within the five year period.
  • There is an exception and the loan is fully waived if an active military member must sell their home and relocate as a requirement of their military service.

Military members and veterans who qualify must complete an approved homebuyer’s education program to receive funds.

FHA Loans

The United States Federal Housing Association (FHA) offers loans to low-income and first-time home buyers. Eric Jeanette of Dream Home Financing pointed out:

“With an FHA loan, you can get a gift from a relative to cover the 3.5% down payment. Then, the seller is permitted to cover your closing costs (up to 6% of the purchase price). You may even get your lender to cover some costs in exchange for a higher rate.”

The option of having a relative pay for your down payment is known as a Gift of Equity, and it’s an option that is unique to the FHA.

Florida home buyers have access to a variety of FHA loans and programs, which include:

  • Florida First Time Home Buyer Loan
  • Florida FHA Refinance
  • Florida FHA Debt Consolidation

You can read more about the specific FHA programs available in Florida on their website, here.

FHLBank First-Time Homebuyer Grant

The benefit of seeking out a grant to help with your down payment is that unlike second mortgages or loans, grants do not need to be repaid. Addition Financial members can take advantage of our partnership with FHLBank to access their grant program for first-time homebuyers.

Our First-Time Homebuyer Mortgages allow our members to buy a home with only a 3% down payment, all of which may be covered by an FHLBank grant. The grant offers up to $5,000 in matching funds to cover the down payment and closing costs.

To qualify, you must contribute at least $1,000 toward the purchase of your home. You must also occupy the home as your primary residence for a minimum of five years and complete a homebuyer education and financial literacy course.

National Homebuyers Fund Down Payment Assistance

The National Homebuyers Fund, or NHF, offers down payment assistance to home buyers in several ways. Here are some highlights of their programs:

  • The NHF DPA may be provided as either a gift (grant) or a forgivable second mortgage
  • The programs are available to both first-time and repeat homebuyers
  • The programs have flexible requirements for both FICO scores and debt-to-income ratio
  • There is refinance assistance available for a primary residence
  • Income limits are generous – low-income and middle-income homebuyers are likely to qualify

What we like about the NHF’s DPA program is that it’s not only for first-time homebuyers and even people with moderate incomes who might not be eligible for other assistance programs may qualify.

Seminole County First-Time Buyer Program

For people planning to buy a home in Seminole County, there are two assistance programs available.

The Central Florida Housing Opportunities Program is for first-time or repeat homebuyers who are permanent residents of the United States who intend to use the home being purchased as their primary residence. You must have a FICO credit score of 640 or higher to qualify.

The assistance is in the form of a 30-year second mortgage up to $7,500, which must be used to pay for a down payment and/or closing costs. The mortgage must be repaid when the home is sold, refinanced or put into foreclosure. The maximum purchase price is $311,881. All recipients must complete an approved homebuyer education program.

The Central Florida Homebuyer’s Dream Program is available to first-time homebuyers in conjunction with FHA, RD or VA loans. It carries the same basic requirements as the Housing Opportunities Program. It also comes in the form of a 30-year deferred 0% second mortgage with the same repayment requirements we mentioned above.

The dream of homeownership is something we believe should be in reach for everybody. The first-time home buyer assistance programs and grants listed here can help you overcome some of the obstacles to homeownership.

At Addition Financial, we have the expertise and guidance you need to buy a home. Click here to read about our flexible mortgage programs!

The First-Time Homebuyer's Guide to a Mortgage

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