Is Down Payment Assistance Worth It?

In today’s economy, not everyone has the funds saved to make a big enough down payment, but there are some ways around this. If you’re in the process of looking for ways to finance your home, you’ve likely come across down payment assistance programs and are wondering if they are worth it.

Before making any big decisions, it’s important to understand this type of loan program. In this blog, we’ll explore its pros and cons and explain how to qualify for down payment assistance.

What is Down Payment Assistance?

This is a type of loan or grant that is typically used by first-time or low-income people who cannot afford the upfront costs of purchasing a home. There are a couple of different types of down payment assistance programs to choose from:

• Forgivable loans: Typically, these loans do not need to be paid back if you have lived in the home for a specific number of years. They are often interest-free.
• Grants: These are cash gifts that don’t need to be paid back either
• Matched savings programs: These loan programs will match the amount you save towards your down payment. These loans come with very strict entry criteria.
• Deferred payment loans: This is a second mortgage home that you don’t have to make payments on until you sell the home, move out, or refinance your mortgage
• Low-interest loans: These will come with subsidized interest rates

Pros of Down Payment Assistance?

Here are some things you can look forward to:

• You can purchase your dream home sooner: Unlike conventional loans, these types of loans can remove months or years of saving up for a down payment. Even with an FHA loan that has a down payment of 3%, this can still be a pretty hefty sum of money to come up with. 
• Lower interest rate: This will depend on what program you choose
• You might be able to avoid private mortgage insurance (PMI): if the programs give you enough money for a high enough down payment, you can avoid taking out PMI.

Cons of Down Payment Assistance

Here are some things you need to be aware of before taking out one of these loans: 

• Closing might take longer: your down payment assistance program adds another step in the mortgage process, which could make things take a little longer
• Possible to overextend yourself: these programs could add more financial strain to your future

So, Is it Worth It?

Yes, if you can’t afford the upfront costs of purchasing your home, even with low down payment loans, down payment assistance programs can open the door to homeownership.

Get in Touch With Mortgage Experts in Florida

Are you ready to start the process of purchasing your dream home? Contact the expert team at Florida State Mortgage today. Give us a call at (954) 359-3000.