Community Lending

Down Payment Assistance

Down Payment Assistance (DPA) is a form of financial aid that is available to help homebuyers cover the cost of a down payment so that they can afford homeownership. They are mostly reserved for first-time homebuyers but sometimes extend to other types of borrowers. Typically, this type of assistance can be sought through your local or state housing authority or via non-profits.

How much you’re able to receive depends on the type of program and your specific situation. Some will make the determination based on the price of the home you’re buying, while others will cap assistance at a certain dollar amount.

When you find a down payment assistance program that you feel may be right for you, it’s important to establish your eligibility. This is usually determined by your income and credit history. Oftentimes, you’ll also need to attend training on a subject usually related to maintaining your finances or the responsibilities that come with homeownership.

What Types of DPA Programs are available?

There are thousands of down payment assistance programs nationwide. They come in several different forms including grants, loans, and credits. Here’s a breakdown of how they differ:

• Grants – Money is given to the borrower that doesn’t have to be paid back under the condition that you own and live in your home for a specified amount of time.  This will typically be secured by a lien on the property until the conditions are met.
• Second mortgage loans – This is the most common type of down payment assistance. Loans are offered at low or no interest rates to be paid back or forgiven over a certain period of time.  This most likely will also be secured by a lien on the property.
• Tax credits – certain agencies throughout specific states issue mortgage credit certificates. These certificates can reduce the amount of federal income tax you pay, which may make it possible for the borrower to have more funds available for a down payment and other costs associated with the mortgage process.  Keep in mind that this credit is not received until you file a tax return, so be sure to consult with a tax advisor for your specific situation.

If you don’t qualify for a Down Payment Assistance program through your local or state housing authority, there are also government-backed programs that require lower down payment amounts. Some of the most popular loan programs that offer low or no down payment options are:

• FHA – With an FHA loan, low-to-moderate income borrowers with a credit score on the lower end can still finance their home with a low down payment option. Insured by the Federal Housing Administration and issued by an FHA-approved lender, such as Silverton Mortgage, this program has helped many people become homeowners throughout the years.
• VA – This program is designed specifically to help service members, veterans, and eligible spouses become homeowners. What makes this loan different from many others is its option for no down payment and no monthly mortgage insurance. VA loans are provided by private lenders with the Department of Veterans Affairs guaranteeing a portion of the loan. This makes it possible for the lender to provide more favorable terms. Silverton Mortgage is proud to support our veterans by offering VA loans and waiving origination fees to those who qualify.
• USDA – This program is a zero-down-payment mortgage option for those who are looking to live in eligible rural areas of the country. If you’re unable to get approved for a conventional loan due to income or credit and would prefer tree lines over skylines, this may be the perfect avenue to homeownership.