Resources for Buyers Struggling With Down Payments

December 4, 2018

First-time buyer surveys consistently show the top hurdle to homeownership is saving up for the down payment. But potential home shoppers may be misunderstanding the amount of money they really need to buy a home.

Down payment resources

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“Paying 20 percent down is, quite frankly, a myth,” Karen Hoskins, vice president at NeighborWorks, told HouseLogic. “Most buyers pay only 5 percent to 10 percent down—some even pay zero.”

Several assistance programs exist to help buyers with down payment concerns break into homeownership. For example, 69 percent of about 2,500 homebuying programs tracked by Down Payment Resource offer down payment assistance. The average amount of assistance from these programs tops $11,000.

HouseLogic offers several places where buyers can search for down payment assistance, including through national government programs. The Federal Housing Administration offers loans to first-time buyers with down payments as low as 3.5 percent. Programs like the USDA Rural Development Loans and VA Home Loans offer eligible buyers zero down payment loans.

Mortgage financing giants Fannie Mae and Freddie Mac offer eligible buyers loans where they can put down as little as 3 percent of the purchase price. When buyers put down less than 20 percent, they pay private mortgage insurance each month to protect the lender’s interest.

Many state and local homebuying programs offer assistance programs too. There are many different forms of assistance, such as forgivable loans and grants (gifts for some or all of the down payment and closing costs) to soft mortgages (down payment assistance loans that are deferred for some period of time based on the program’s requirements).

To find a program, HouseLogic recommends NeighborWorks, which provides housing counselors to discuss mortgage options for free, and the Down Payment Resource, where buyers can check their eligibility for assistance programs. Mortgage brokers should also be able to supply buyers with information about programs in their area and help determine eligibility.

Read the full scope of your buyers’ options and share the available resources for down payments—or no down payments—on HouseLogic. 

Known Ways You Can Buy a House With No Down Payment,” (December 2018)