Coming up with a down payment can be the most costly aspect of home buying. Today we’re covering some of the down payment assistance options that are available out there.
First of all, it should be noted that receiving down payment assistance is possible only with a residence which you will be occupying. This excludes investment properties. There are three types of programs which are the most common: down payment programs, affordable first mortgages and mortgage credit certificates.
Down payment programs typically act as a second or third mortgage. You are granted an amount of money which is able to be put towards down payment, closing costs or even put towards repairs. Affordable first mortgages on the other hand offer mortgages to accompany the down payment assistance programs. They are funded by state housing finance agencies and may subsidize portions of the interest to offer lower rates than what the normal market can provide. This will effectively help lower your buying costs and monthly payments.
Lastly, mortgage credit certificates are an annual federal income tax credit designed to help first-time homebuyers offset a portion of their mortgage interest on a new mortgage as a way to help qualify for a loan. As a tax credit, not a deduction, qualifying for an MCC helps you reduce your annual taxes dollar for dollar. The mortgage credit allowed varies depending on the state or local government that issues the certificates.
Your loan officer can answer any questions you may have, so reach out to them today!