Making The Most Of Your Money

Three Rules for Down-Payment Assistance Eligibility

28 July 2016 by Glen Robinson

Saving up for a down payment on a house can be challenging. This is why there are programs that are set up for those who are not able to come up with the down-payment money that they need. Here are three rules that determine who is eligible to use a down-payment assistance program.

First-Time Homebuyers

Generally, those looking to purchase a home with down-payment assistance must be first-time homebuyers. However, you may be eligible if you haven't owned a home in more than three years. If you are looking into buying a second property, though, then you won't be eligible. First-time buyers can also apply for a first-time homebuyer assistance program. This assistance comes in the form of a loan, however, and these loans have the downside of high interest rates, which are a downside for more reasons than that the increased interest will mean that a home takes longer to pay off. If you are able to make larger payments, doing so can definitely be worth it in the end. 

Approved Home Requirements

You cannot just buy any home with down-payment assistance. If you plan on using down-payment assistance, you must be sure that you look for homes that are approved, which will generally be homes that are located within a certain area. Sometimes there are also restrictions on whether or not you can use the assistance program to buy anything other than a single-family home. For example, you probably won't be eligible for the program if you are buying a townhouse or condo. 

Income Requirements

You cannot use a down-payment assistance program if you make too much money. Your income has to be under a certain amount that is set by the program. Without income restrictions, even those who are able to afford a down-payment would be able to use such assistance. The programs were developed to help those who truly have financial restrictions that prevent them from being able to purchase a home. 

When you know the three rules of who is eligible for down-payment assistance, although you will probably want to learn more about this topic, you can determine whether or not this kind of assistance is something you can use with your home purchase. If so, then you know how to prepare for using the assistance. For example, you know that you can look only at homes that are approved. Keep in mind that this is an additional loan you are going to have to pay off on top of the mortgage loan, so it's important that you are sure this is something you can afford in the long term.

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