More prospective home buyers would likely qualify for down payment assistance than they think. Indeed, more than 68 million single-family and condo households – or about 87 percent -- would qualify for a down payment program available in the county where they are located, according to a new study by Down Payment Resource and RealtyTrac in an analysis that included a look at nearly 2,300 down payment programs nationwide.
“Many homebuyers, especially Millennials, haven’t fully investigated their home financing options because they are pessimistic about qualifying for a mortgage,” says Rob Chrane, president and CEO of Down Payment Resource. “Our Homeownership Program Index highlights the wide range and availability of down payment programs available to today’s homebuyers. In fact, 91 percent of the 2,290 programs in our registry have funds available to lend to eligible buyers. Plus, income limits vary depending on the market and programs extend beyond just first-time homebuyers. It’s important for buyers to research down payment programs as part of their loan shopping process.”
Here are some findings from the report:
- The average amount of down payment assistance across all counties is $11,565.
- More than half of the available down payment programs are known as Community Seconds, a second mortgage issued by an HFA (or Housing Finance Agencies) or nonprofit organization with a very low or no interest rate. The program could reduce the amount of cash needed to close from $20,000 to $200. Other major down payment programs include first mortgage loans with below-mark interest rates or 100 percent financing or Mortgage Credit Certificates (MCCs), which provide up to $2,000 in annual tax credits for the life of the loan. Neighborhood Stabilization Program loans and grants are also often available that aim to revitalize communities suffering from a large number of foreclosures, high unemployment, or other concerns. Many of these programs can be combined with other programs too, such as VA and FHA home loans.
- The South leads the nation in the total number of available home buyer down payment programs, followed by the West.
- The states with the greatest number of down payment programs are located in California, Florida, Texas, Maryland, New York, Georgia, Pennsylvania, Massachusetts, Illinois, and Colorado.
“Down payment assistance tends to suffer from lack of awareness,” says Mark Hughes, COO at First Team Real Estate in the Southern California market. “Guidelines and specifics tend to change with economic swings. Agents typically don’t keep up with the changing requirements and many buyers that depend on their guidance may be unaware of the opportunities.” At First Team, Hughes says they constantly update lending opportunities and requirements and circulate them weekly to keep their buyers aware of the opportunities available.
Where Down Payment Assistance Can Help the Most
The study showed the following 10 counties have the most homes qualifying for down payment assistance:
- Wayne County, Mich.: 94.37% or 653,221 homes qualify for down payment assistance there
- Dallas County, Texas: 92.81% or 533,518 homes
- Harris County, Texas: 92.67% or 961,957 homes
- Clark County, Nev.: 92.20% or 558,411 homes
- San Diego County, Calif.: 86.18% or 618,050 homes
- Maricopa County, Ariz.: 85.79% or 1,052,746 homes
- Cook County, Ill.: 84.80% or 1,163,913 homes
- Broward County, Fla.: 83.89% or 523,178 homes
- Miami-Dade County, Fla.: 82.25% or 589,683 homes
- Los Angeles County, Calif.: 78.18% or 1,377,813
For a view of available down payment programs by area, visit downpaymentresource.com.
Source: “87 Percent of U.S. Homes Qualify for Down Payment Help According to RealtyTrac and Down Payment Resource Analysis,” RealtyTrac (Feb. 3, 2015)