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  • Writer's pictureColleen

Down Payment Assistance Programs in PA

If you’re looking to buy a home, your down payment doesn’t have to be a big hurdle. According to the National Association of Realtors (NAR), 38% of first-time homebuyers find saving for a down payment the most challenging step. But the reality is, you probably don’t need to put down as much as you think.

Data from NAR shows the median down payment hasn’t been over 20% since 2005. In fact, the median down payment for all homebuyers today is only 15%. And it’s even lower for first-time homebuyers at 8%. But just because that’s the median, it doesn’t mean you have to put that much down. Some qualified buyers put down even less.

 


Down Payment Reality vs Expectations

For example, there are loan types, like FHA loans, with down payments as low as 3.5%, as well as options like VA loans and USDA loans with no down payment requirements for qualified applicants. But let’s focus in on another valuable resource that may be able to help with your down payment: down payment assistance programs.

According to Down Payment Resource, there are thousands of programs available for homebuyers – and 75% of these are down payment assistance programs.

And it’s not just first-time homebuyers that are eligible. That means no matter where you are in your homebuying journey, there could be an option available for you. As Down Payment Resource notes:

“You don’t have to be a first-time buyer. Over 39% of all [homeownership] programs are for repeat homebuyers who have owned a home in the last 3 years.”

The best place to start as you search for more information is with a trusted real estate professional. They’ll be able to share more information about what may be available, including additional programs for specific professions or communities.

 

Types of down payment assistance available in Pennsylvania

Pennsylvania has both government-funded and privately funded down payment assistance programs to offer homebuyers. These programs come in a variety of forms. When shopping for down payment assistance programs, make sure you know how the program works.

Some programs require you to stay in the home for a set number of years. Applying for a program that requires you to be in the home for five years when you don’t plan to be there that long may not make sense.

Grant

A grant is the most ideal for homebuyers because once you meet its terms and conditions, it doesn’t have to be paid back. It is essentially free money given to those who qualify. Look for this type of program first because you don’t have to worry about paying it back in the future.

Second mortgage

Many other down payment assistance programs are offered in the form of a second mortgage. This works exactly as it sounds — it is a loan that buyers will have to pay off alongside the primary mortgage they have for the home. Some second mortgages, however, don’t require payments and only need to be paid back in the event that you sell or refinance the home

Forgivable second mortgage

Some second mortgages may be forgiven or partially forgiven after a certain period of time. Buyers using these loans may need to make payments over a specified number of years, but after a certain period of time, or after certain conditions are met, the loan will be forgiven.

Matched savings grant

A matched-savings grant means the buyer must put down a certain amount of money on the house, and the amount they put down can be matched up to a specified amount. For a matched savings grant up to $10,000, if the buyer has $10,000 for a down payment, their down payment will total $20,000 with the grant funds that are matched dollar-for-dollar.

 

Additional Down Payment Resources That Can Help

Here are a few down payment assistance programs that are helping many of today’s buyers achieve the dream of homeownership:

·         Teacher Next Door is designed to help teachers, first responders, health providers, government employees, active-duty military personnel, and veterans reach their down payment goals.

·         Fannie Mae provides down-payment assistance to eligible first-time homebuyers living in majority-Latino communities.

·         Freddie Mac also has options designed specifically for homebuyers with modest credit scores and limited funds for a down payment.

·         PHFA Grant- Provided through the PHFA, this is a $500 grant that can be used towards a down payment and/or closing costs. This grant can only be used if you use the HFA PreferredTM (Lo MI) loan. Applicants do not need to be first-time homebuyers to apply, but they must fall under the specified income requirements for their county. They are also required to put down at least $1,000 of their own money.

·         The 3By30 program lays out actionable strategies to add 3 million new Black homeowners by 2030. These programs offer valuable resources for potential buyers, making it easier for them to secure down payments and realize their dream of homeownership.

·         HOMEstead Closing Cost and Down Payment Assistance Loan-The HOMEstead Loan comes in the form of a second mortgage with no interest. Qualified applicants will receive between $1,000 and $10,000 to help with closing costs and a down payment. The loan will be forgiven at a rate of 20% for five years.

·         For Native Americans, Down Payment Resource highlights 42 U.S. homebuyer assistance programs across 14 states that ease the path to homeownership by providing support with down payments and other associated costs.

·         Access Down Payment and Closing Cost Assistance Program (for those with disabilities)- The PHFA offers this loan to qualified buyers with disabilities or those who have family members with a disability. It can be used in combination with any of the PHFA’s home loan programs. Eligible applicants may qualify for up to $15,000 to help with a down payment and closing costs in the form of a no-interest loan.

·         Chenoa Fund is a down payment assistance program provided through CBC Mortgage Agency (CBCMA), which is one of nine tribally-owned enterprises of the Cedar Band Corporation. They offer a variety of down payment assistance typically for people of color, including forgivable loans, for Federal Housing Administration (FHA) and conventional mortgages.

·         First Front Door is a federally funded program that matches every $1 put in by the qualified buyer with $3 to help with closing costs and the down payment. That means if the buyer puts in $1,000, they will be matched with $3,000 in grant funds. Participants can receive up to $5,000 in funds.

 

Even if you don’t qualify for these types of programs, there are many other federal, state, and local options available to look into, and a REALTOR® can help you find the ones that meet your needs as you explore what’s available.

 

Why working with a top REALTOR® is key

Achieving the dream of having a home may be more within reach than you think, especially when you know where to find the right support. To learn more, reach out to a REALTOR® who can guide you through the available resources.

Navigating the housing market can be tough, especially if you’ve never bought a home before. Finding a skilled and experienced REALTOR® will help you find your way with the least confusion. They can advise on current trends, curate a search that fits your criteria, and help you create the best offer possible within your budget when you decide to purchase. They may also be able to help you find a lender experienced with down payment assistance programs.

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