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There are special programs with no money down, grants for down payment assistance or below market interest rates.  Each of these programs may have a different combination of guidelines for qualification.  Some programs (but not all) may require you to be a first-time buyer, have income and sales price limits, or location guidelines as specific as the census tract number.  So how does a home buyer know what programs they qualify for when something as simple as choosing one property address over another can completely change the programs you qualify for?

That is the power of DownPaymentFinder.com.  We streamline this process for you.

 

Charitable Organizations(501c3)

Charitable organizations (501c3) that utilize a HUD/FHA rule that allows for down payment assistance to be given to the homebuyer.  This money comes from an existing pool of funds and can be used for a down payment and/or closing costs per FHA guidelines.  Typically, the seller gets full asking price for their home and agrees to pay a seller’s service fee to a participating charitable organization. The fee the seller pays equals the grant amount which is typically 3% of the sales price plus a fixed fee that is kept by the non-profit. This method allows the seller to offer a home buyer a free down payment grant, increasing the chances of a quicker sale without the seller needing to make additional concessions.

Typically these grants are the easiest to qualify for. 

 

Community Reinvestment Act

The Community Reinvestment Act (CRA) is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low and moderate income neighborhoods.  It was enacted by congress in 1977.  One aspect of CRA is for depository institutions to write home mortgages and promote home ownership, particularly in low and moderate income neighborhoods.  Because of CRA lending requirements, lending institutions may offer “special financing” or CRA loans based on specific criteria.  Some lending criteria are controlled by the Community Reinvestment Act while other guidelines are controlled by and therefore unique to each lending institution.  Because there is not one set of guidelines from one bank to another it can be very difficult to know which programs you may qualify for and which ones you don’t.

 

Government Subsidy

Government subsidies can come in the form of federal, state or local programs. 

 

Other

Most programs are available on a first come first serve basis.  Some programs have limited funding or availability and other programs are available all the time with variations in rate or terms.  Often the terms and availability of many special financing programs can not be guaranteed until you have actually written a contract on a specific property.  Because some, but not all, programs are dependent on the properrty address or sales price these details must be known before reserving the special financing for you.

Some down payment assistance programs may have a specific amount of time you have to occupy the home or you may be required to pay back a portion of the grant from the proceeds of the sale of your home.  Sometimes this is called a “silent second”.  For example, say you receive a grant for $3,000 with a requirement to live in the home for 5 years.  Often the grant is pro-rated over the amount of time you are required to live in the home.  If you sell the home after 4 years you would have to pay back 20% of the $3,000, or $600.  In this case you still received $2,400 of grant money that you did not have to pay back and the other $600 you effectively borrowed for 4 years and it did not cost you a thing.  That is better than having to come up with $3,000 out of your pocket today.  Not all programs are structured this way.

 

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