First Time Buyers And Others - Where Do I Get The Down Payment?

Posted at 3:50 AM, Jul. 14, 2008

Many prospective buyers are ready to get into the housing market but wonder how they can come up with the down payments that lenders require. 

Depending upon the type of loan, a home mortgage typically requires anywhere from 3% down for an FHA or VHDA loan or 5 percent down for a conventional loan.   If you have the money, then you’re set. But what if you don’t?  What if you’re renting? You can afford a mortgage within your budget, but coming up with the down payment money needed to begin the transaction can be challenging. So, where can you turn?

One of the most overlooked sources of down payment funds is likely right under your nose—in the form grant programs.  These programs either provide outright monetary grants for down payment or money to buyers in the form of a forgivable loan. 

Recently there was an article in The Richmond Times Dispatch about a Workforce Housing project where Virginia Commonwealth University Health Systems helped one of its employees buy a home using the "forgivable loan" process for the $5000 down payment.  In essence, VCU helped her buy the home and she would not have to pay it back if she kept the property for a certain number of years.  The City of Richmond has a similar program for qualifying employees.

So, what if you don't work for VCU or the City of Richmond?  Take heart, because unless or until the federal government bans down payment assistance grants, a home buyer can get this help with the combined efforts of a non-profit down payment assistance program such as Nehemiah and Seller contributions.

In the past it was challenging to find these special programs, but now all you need is your agent or your lender, and you will find the programs that may just be the answer to your down payment quanadary and the way to open the door to home ownership.