Are there any good down payment aid programs still available out there for home buyers and investors these days? This is the question we were pondering as we prepared to write the article for today.
With the White House, banking industry, and advocates focused on the foreclosure crisis and helping out those that have been hit the hardest by the decline of the real estate market and the increase in foreclosures, we were wondering if there is anything available for people that are trying to purchase a home to live in or invest in hopes of making a return.
This is a logical question in light of the fact that the Home Buyer Tax Credit that the Obama administration recently let pass is over and done with. In fact, it doesn’t seem like they are going to bring it back any time soon. So where does that leave those that are trying to purchase a home and cannot afford the now mandatory 10% to 20% down payment that is required in order to purchase a home these days.
10% to 20% Down Payment Can Kill the American Dream
We understand the banking industry doesn’t want to get caught holding the ball with a bunch of bad borrowers these days in light of what has happen to them, but these down payment requirements are really putting a damper on things in the housing market. Not many people have the cash on hand to put down 10% on a home, let alone enough cash to put down a 20% down payment on a home.
On a $200,000 home purchase, this ranges from $20,000 to $40,000 dollars for the down payment. I don’t know where you are from, but this is a ton of cash to put down on a home and most people cannot afford half of that. And the real estate investment community seems to have no help or aid in this market for down payment assistance.
Down Payment Aid Programs
With all of the above said, we set out to find a few programs that might be of use and service to you if you are looking to purchase a new home or even invest in another home. Before you get too excited, we must warn you that the pickings are slim, but we are trying to locate more and more as we speak and will be sure to update you if we do.
1) FHA Down Payment Aid Programs – Unless you have been hiding under a rock for the past few decades, you are familiar with the FHA programs that help people get into a home. Without FHA, many homeowners would not be owning a home simply because they cannot afford the 10 to 20% down payments that are required. On the FHA program, you only have to come up with 3% of the down payment and FHA guarantees your loan for the lender. This is great because you get to go into the home without going broke and the lender gets a guaranteed loan back by federal money.
2) VA Loan Programs – Unfortunately, you cannot use the VA loan to purchase investment property, however, you can use it to buy your primary residence, which is not too bad of an offer. The Government does reach out to help many of it’s own people from time to time and the VA Loan is a great example of this.
3) Private Loans – There are a variety of companies out there that are willing to loan you the down payment money to make your purchase a reality, but we are not prepared to endorse any of them as they are not government backed and many are not large companies that we are willing to direct you to.
Our advice would be that if you cannot afford the down payment, then maybe you should reconsider your purchase and back into this thing slowly when you do have the funds. One thing is for sure, the opportunities to purchase real estate is not going to disappear any time soon and we don’t even think you have to rush to take advantage of the low rates or low property values cause they will be here for a while.
If you are out searching for down payment aid programs and come across something that might be beneficial for others, please don’t hesitate to share it here or in one of the discussion forums.
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