Author: homebuyeraustin

Purchasing a home in the first place can be a daunting task for a beginner and that explains why the mortgage lenders advise that you choose your home first. This not only helps you estimate the cost of your mortgage but also gives you opportunity to make a firm decision on the right home. Consider the act of looking for a new home like window shopping, you have to keep looking through stalls, one after the other until you get an item that suits to your taste.

First Time Homebuyer Down Payment Assistance Options in Austin

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Many first time homebuyers find it hard to raise enough funds to cater for the down payment of their mortgages or home loans. This is because they have to contend with energy, water, and rental bills among others, leaving virtually no money behind. Luckily, there are down payment assistance options that you can use, to ensure that you put your step forward to becoming a First time homebuyer in Austin. Let’s take a look at the different down payment assistance options that you can choose, and their drawbacks.

  1. Apply for low down payment mortgages 

Traditionally, mortgage lenders stick to the 20% down payment for the conventional mortgages and home loans. However, there are many mortgages that demands for low down payment tailored for first time homebuyers. For instance, the VA loan does not demand for any down payment as long as you qualify. FHA loan on the other hand, allows for a minimum down payment of 3.5% which majority of first time homebuyers can afford. However, whenever you choose to apply for these mortgages, you will be required to pay huge monthly installments. 

  1. Take advantage of state down payment assistance programs 

Majority of the states across the country, have put in place down payment assistance programs. This assistance often comes in form of grants, forgivable loans, or zero interest loans. In addition, it is combined with tax breaks and affordable mortgage interest rates.  However, some of these programs are narrowed down to geographical location of the states, usually set maximum selling price of the property at hand, and limits borrowers based on their income levels. 

  1. Make use of down payment gifts 

It is a common phenomenon for first time homebuyers to get the help they need from friends and family members. Some mortgages and home loans allow one to receive these gift funds, which they can use to pay for the down payment. However, applying for a gift fund goes far and beyond depositing the check, as it involves a lot of documentation. In addition, the donor must verify to the lender that they gave you the gift and are in a position to make the donation. 

  1. Crowd funding for down payment 

There are many sites across the country that let first time homebuyers to raise the money they need to pay for down payment. The monies received are channeled into a bank account. However, whenever you are using this path, you need to watch out on the fees and obligations involved. For instance, some crowd funding sites charges for credit card and transaction processing fees, as well as additional costs for each donation made. This in turn makes it a costly down payment assistance program to follow.