Down Payment Assistance Programs

As a single mom in the early 1990s, one of my grandest goals was to own my own home. Back then, I knew nothing about qualifying or the different kinds of loans available. And I certainly did know anything about down payment assistance. I only knew that owning a home had to be better than renting an apartment.
I reached out to a family friend, a realtor, for guidance. He assured me that my goal of home ownership was possible. He referred me to a mortgage professional who specialized in helping low to moderate income families find the loans - and resources - they needed to become homeowners.

While I had been saving diligently for two years, I still needed help with the down payment. The loan officer told me that the city of Garland had a down payment assistance program that offered up to $4,000 for first time homeowners looking to buy within the city - and I was just the buyer this program was designed to help.
Through this program, I was able to purchase a lovely little 4 bedroom, 2 bath home in a a quiet little neighborhood where we lived for the next six years.

Now, more than 20 years later, many cities still offer these kinds of programs. McKinney, Plano, Garland, Dallas and Arlington are but a few of the communities that offer these assistance with down payments and closing costs. The amount and form of the assistance varies from city to city. For example, Denison offers a grant up to $2,500 while McKinney offers up to $10,000 as a 0% interest five-year forgivable loan.

While no two programs are the identical, they tend to have the same general criteria:

• The property must be located in the city limits of community providing the assistance
• The buyer must be a first-time buyer or haven’t owned a home in the last three years. 
• The buyer must occupy the home.
• The buyer must meet the income eligibility requirements, which vary from city to city.
• The buyer must qualify for a loan from a private lender.
• The buyer must be a US citizen or permanent legal residents.

In many cases, the buyer must attend HUD approved home ownership training class as well.

From there, cities can and do set their own rules and guidelines.

Most cities open their programs to any eligible buyer seeking to purchase property within their city limits. Some cities give preference to current residents, while others provide assistance on a first-come, first serve bases. Some cities open the down payment assistance program to displaced homemakers who previously owned a home with a spouse or lived in a home owned by the spouse even if were within the last three years, provided they were not awarded the home during divorce proceedings. Other cities make no exceptions. In Frisco, the down payment program is targeted to families employed by the City of Frisco or the Frisco Independent School District.

Some cities, such as Grand Prairie, provide assistance only for pre-existing housing; others include new construction.

 Furthermore, some cities cap the amount of liquid assets a buyer can have, and this cap varies from city to city. For example, in Garland that amount is $20,000, in Arlington, the limit is $15,000 and in Irving it’s $10,000.

While Meanwhile some cities require buyers to invest a minimum dollar amount toward the down payment. For example, Grand Prairie requires buyers to provide $500 toward the purchase, while Arlington requires at minimum a $1,000 buyer contribution. Some cities determine the buyer contribution based on a sliding scale.

So with so many disparate rules, where does the buyer begin?

First select which community you want to live in and then research their program requirements. The links listed throughout the article are a good place to start. For a list of down payment assistance programs in Texas, click here.

Next, plan to attend a HUD-approved. Click here for a statewide list of providers.

After your class is scheduled, seek out a realtor and a mortgage broker who are familiar with first time buyer programs.

I’ve walked down this road before as a buyer, and now I’m here to guide you through every step in the purchase of your home. I’ll put you in touch with a mortgage professional. You'll want to get you pre-qualified as early in the process as possible. Even if you don’t qualify for a loan right away, the mortgage teams I work with can put you in touch with a reputable credit repair program so that you can start working toward your goals.

Once you’re approved for a loan, your mortgage professional and I will guide you through down payment assistance process and help you submit your package to the city.

Ready to get started? Drop me a note at lynn.windle@coldwellbanker.com, and let’s get you on your way to homeownership!