Down payment assistance programs

[Franklin Marte]

Is it a good idea to use a down payment assistance program? I want to get a house and I don't have quite enough for a down payment I'm trying to think of ways to come up with a down payment I'm planning to use an FHA loan.

[Zack Karp]

@Franklin Marte

Depends on your property location and situation.  Usually, no.  Most of the time the "assistance" is actually a disguise for a higher interest rate and a 2nd lien against your property that you may or may not have to pay pack.  And even if you don't have to pay it back, it's usually forgiven over time, which means you are locked into that loan or you have to pay it back anyway.  No such thing as a free lunch...

Do you have to go with FHA? If you can go with Conventional financing, there are creative ways without much down. For example, I just helped someone buy a $192K house with literally ZERO money out of pocket using a Conventional 3% down loan in combination with seller credits and lender credits. (Full transparency, they needed to pay earnest money and appraisal upfront, but got those back at closing.) WAAAAYYYYY better than down payment assistance because they got a lower rate and weren't stuck.

FHA is good too but there is a 3.5% minimum investment requirement. Which means that even if you get some credits, you still have to verify that you have the 3.5% down. However it can come from gift funds, and there are ways to get creative with that too.

It's also possible that DPA is the best option for you.  For some people, it's the right move.

Not sure where you are located, but if you need a rockstar loan officer, let me know.  I have a small network of top tier colleagues across the country.  The kind of people you won't find by calling a bank or an internet lender and know how to get stuff like this done.

Best of luck!