What Is Down Payment Assistance
Down payment assistance can include loans, grants, tax credits1 and other programs designed to help eligible homebuyers cover down payment or even closing costs. These programs are offered by federal, state, county or local government agencies, nonprofits or employers. Availability and qualification requirements vary by state. The American Dream program, offered by U.S. Bank, helps consumers with limited resources become homeowners, especially low-to-moderate income borrowers and in LMI neighborhoods.
Must Earn Income Thats Above
Eligible home buyers must earn an income thats no more than 20 percent over the median income for a metropolitan area. For example, in Portland, Maine, where the median income is $60,000, home buyers must earn $72,000 per year or less to claim their cash down payment grant.
Income exceptions can be made in high-cost areas, such as New York, Los Angeles, and other cities where the cost of living is high.
In high cost areas, eligible home buyers must earn an income thats no more than 80 percent over the local median income. In San Francisco, eligible home buyers must earn $189,000 per year or less.
Huds Good Neighbor Next Door Sales Program
Do you work in a public service role such as law enforcement, teaching, or the fire department? Then you can receive 50% off the HUD appraised value of select homes through HUDs GNND Sales program.
The only catch is that the home must be located in a revitalization area, and you must commit to living there for 36 months. You also need to act fast because homes are only listed for sale during a seven-day window.
Also Check: California Grant Deed Fillable Form Free
Bank Of America Mortgage Rates And Fees
If youre already a Bank of America customer, you may qualify for a reduction of up to $600 in the mortgage lender origination fee.
One of the most important considerations when choosing a mortgage lender is understanding what the loan will cost. In order to provide consumers with a general sense of what a lender might charge, NerdWallet scores lenders on two factors regarding fees and mortgage rates, according to the most recently available Home Mortgage Disclosure Act data:
Bank of America earns 2 of 5 stars for average origination fee.
Bank of America earns 3 of 5 stars for offered mortgage rates compared with the best available rates on comparable loans.
Borrowers should consider the balance between lender fees and mortgage rates. While it’s not always the case, paying upfront fees can lower your mortgage interest rate. Some lenders will charge higher upfront fees to lower their advertised interest rate and make it more attractive. Some lenders just charge higher upfront fees.
You can decide whether to buy discount points a fee paid with your closing costs to reduce your mortgage rate.
Deciding whether to pay higher upfront fees is a matter of considering how long you plan to live in your home and how much cash you have to apply toward closing costs when you sign the loan paperwork.
Requirements For First Time Homebuyer Assistance
Those who meet the following conditions qualify as first-time homebuyers, according to the U.S. Department of Housing and Urban Development :
- An individual with no ownership in a primary residence for exactly three years prior to the date of purchase of the new property, or someone with a spouse who meets this criterion
- An individual who only owned with a former spouse during marriage, but is now a single parent.
- A person who had only owned with a former spouse and is now considered a displaced homemaker.
- A person who has only owned nonpermanently fixed foundation residences .
- An individual who has only owned a property that could not meet state, local, or model building codes. The property in question also must be deemed unable to be brought into compliance for less than the cost of constructing a permanent structure.
There are also homeownership assistance programs with qualification requirements that differ from some of the government programs standards. For example, nonprofit programs are available for qualified homebuyers in certain public service jobs. Below, weve outlined the most common types of financial aid programs that first-time homebuyers should know about. We also recommend checking with your state and local housing departments, HUD-approved housing counseling agencies, and your real estate agent or mortgage lender to see whats available in your area.
Recommended Reading: Forsyth County Small Business Grants
Grants Dont Have To Be Paid Back
The Bank of America Down Payment Grant provides up to 3% of the house purchase price or $10,000 toward a down payment. The funds do not require repayment.
Americas Home Grant® offers a lender credit of up to $7,500 that can be used for closing costs, such as title insurance and recording fees, or to permanently buy down the interest rate. The funds do not require repayment and can be combined with funds from the down payment grant.
Certain eligibility requirements apply, such as being owner-occupants.
Will The Downpayment Towards Equity Act Become Law
The Downpayment Toward Equity Act is unlikely to pass into law prior to the November 2022 midterm elections because getting cash grants to home buyers requires logistics, which are currently undefined.
There are no rules by which the government distributes grants to state agencies, nor for states moving money to local title companies. Until those rules are written, the bill remains stalled.
There are versions of the bill in the House and the Senate. Neither has been brought to a vote.
Recommended Reading: Grants For Small Business In Ga
Problem With A Lender Being Slow
Actually, it can cost you both money that you put in with inspections and maybe earnest money. If your contract doesn’t actually close and it can ask you actually cost you the home. Because if we think for a minute, when we get under contract, let’s say we get under contract here at this point in time.
And our contract is going to cover until the closing date. We told the seller that we were going to close within a particular period of time. So it covers everything up to the time that you gave the seller. The problem is we had a contract that says, we’re going to close on the date that you promised to close on that date. So the minute that we can’t close on that date, and we actually say, we need a little bit more time. Maybe that’s seven days.
First Time Home Buyer Down Payment Grant
If you qualify for our First Time Home Buyer Program, you may also be eligible for a down payment grant. A grant can help you raise the money you need immediately for a home. The down payment often proves to be an obstacle for first time homebuyers. They dont have money from a previous home sale that they can roll over to put down on a new place.
We offer the down payment grant to help more people get into the homes they have always dreamed of owning. Our conditions include:
- Must be used in conjunction with the PeoplesBank First Time Home Buyer loan
- To be used toward a down payment & closing costs of a single family, primary residence
- Maximum grant of $3,000 does not need to be repaid
- Borrower must contribute $1 for every $2 of grant money allocated
- Ex. to receive the full $3,000 the borrow must contribute $1,500 from their own funds
We offer grants to help more people achieve their goal of homeownership. When you use our grant program, you dont have to pay back the money you receive. Grants are conditional, but they do not become debt. With a grant, you can eliminate the need to borrow additional funds and pay more toward the home initially.
Grants give you the opportunity to take any money you have saved and put it toward something else in your new home.
Don’t Miss: Grants For Small Business In Pa
Boa Is Good We Just Also Need To Know The Cons
So it’s not all drawbacks though. But I don’t wanna just like pitch this as a golden ray of home loan, sunshine. So I felt like the negative should be covered first. Cause I see a lot of these videos on the Bank of America grant. That’s like good news, free money. Get it while you can that kind of thing. That’s a fair representation without all of the facets of this program and, the pros and cons.
What Is A First
A first-time home buyer grant is a specific grant type designed to create new homeowners nationwide. Governments award grants on the local, state, and federal level and charitable and housing foundations nationwide.
Grants dont require repayment because the grant recipient performs a public good. For first-time home buyers, that public good is homeownership.
Homeownership is the keystone of the U.S. economy because homeowners:
- Stabilize neighborhoods of all shapes
- Increase prosperity within all communities
- Build generational wealth within families
According to government research, $10,000 grants to first-time home buyers can increase homeownership by 34 percent, so its no surprise that Congress recently introduced eight bills promoting grants and tax credits for first-time home buyers, including the LIFT Act.
When homeownership rates rise, its a greater economic good.
Also Check: Grant For Low Income Families
Bank Of America Mortgage Loan Types
The lender based in Charlotte, North Carolina, offers a wide range of purchase and refinance loans, including 15-, 20- and 30-year fixed-rate loans and 30-year adjustable-rate mortgages with 5/6, 7/6 and 10/6 terms. With these adjustable-rate mortgages, interest rates can change every six months after the initial 5-, 7- or 10-year fixed-rate periods. It also issues jumbo loans up to $2.5 million and government-backed mortgage products such as FHA and VA loans.
Bank of Americas Community Homeownership Commitment is designed to make homeownership more affordable for first-time and low- to moderate-income home buyers in communities across the country. The program offers:
Up to $10,000 or 3% of the purchase price, whichever is less, in down payment assistance in select locations.
Up to $7,500 for nonrecurring closing expenses, like title insurance and recording fees, available in some parts of the country.
The Affordable Loan Solution mortgage with a minimum down payment of 3%.
Compare To Other Lenders
|NerdWallet rating NerdWallet’s ratings are determined by our editorial team. The scoring formula takes into account loan types and loan products offered, online conveniences, online mortgage rate information, and the rate spread and origination fee lenders reported in the latest available HMDA data.||NerdWallet rating NerdWallet’s ratings are determined by our editorial team. The scoring formula takes into account loan types and loan products offered, online conveniences, online mortgage rate information, and the rate spread and origination fee lenders reported in the latest available HMDA data.||NerdWallet rating NerdWallet’s ratings are determined by our editorial team. The scoring formula takes into account loan types and loan products offered, online conveniences, online mortgage rate information, and the rate spread and origination fee lenders reported in the latest available HMDA data.|
Purchase, Refinance, Jumbo, Fixed, Adjustable, FHA, VA
Loan types and products
Purchase, Refinance, Home Equity, Reverse, Jumbo, Fixed, Adjustable, FHA, VA, USDA
Loan types and products
Purchase, Refinance, Fixed, Adjustable, FHA, VA, USDA
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Sellers Don’t Want To Work With Big Banks
Some of the drawbacks are that not only could they be slow, like one common are mentioned, but sellers are also aware of some of the Bank of America. Issues with timing like that and can be afraid to accept offers from quote-unquote, big banks. And this isn’t just a Bank of America issue.
There are a lot of listing agents who would recommend their sellers to actually not work with a client who works with a buyer who might be approved through a bigger bank because they can have those issues of lack of communication and possibly longer closing time and the seller, they want their money, but they also want to close on time too. They don’t want to have to deal with extensions. From a non-communicative bank.
Now Bank of America still does a lot of business. Don’t get me wrong there. Like they might have a bad reputation for being slow amongst listing agents or sellers, but they still do a lot of business. And I’m sure they have plenty of loans that still close on time or earlier than the contract closing date. But sellers can be leery of some of those offers that come in with this like big bank lender reputation compared to a local lender that has a really great reputation and all of the agents know and that they trust and have worked with to see that they’re reputable, it’s actually close on a deal.
The $25000 Downpayment Toward Equity Program Expected In 2022
In 2021, Congress introduced a bill titled The Downpayment Toward Equity Act, a home buyer grant for first-generation home buyers with extra grant money available to renters with socially or economically disadvantaged backgrounds.
The Downpayment Toward Equity Act awards up to $25,000 so renters can buy their first home. Grant monies can be used to make a down payment, pay for closing costs, lower your mortgage rate by using discount points, and cover other expenses, too.
Check your eligibility for the $25,000 Grant.
Recommended Reading: First Time Home Buyers Grant Application
Should I Wait Until Mortgage Rates Are Lower To Buy A House
With so much uncertainty surrounding mortgage rates, waiting isnt a strategy thats guaranteed to work in your favor. Inflation remains high and the Federal Reserve has signaled its plans for more hikes to short-term interest rates, two factors that could put pressure on mortgage lenders to continue raising rates.
Although your interest rate impacts how much house you can buy, mortgage rates dont have to drive your decision.If you can afford to buy right now, then go for it if not, just wait, Jones says. Buying a home with an affordable monthly payment is more important than waiting for rates to drop.
Aside from interest rates, you may also want to take home prices into consideration. Experts dont expect home prices to crash thanks to low inventory and strong demand from buyers. Even if rising rates curb demand, stricter lending standards have made todays housing market much more stable than the market leading up to the 2008 collapse.
Home Buyer Education Resources
If you’re not quite sure how to begin or even know where to get started on your house search, you should definitely use online educational programs and resources. A decent first-time home buying course might be free or low-cost, and it may teach you about loan alternatives, the purchase process, and how to apply for a mortgage. Look through real estate courses available online to see if Zing University or another free course makes sense for you.
Recommended Reading: Bank Of America Grant Program
Get An Offer For A Home Accepted & Close
Depending on the demand for homes in your area, you may not have much time to decide whether or not to put in an offer on a home. In that scenario, youll still want to carefully consider the offer price and what buyer protections you include or omit from the contract. For nearly two years, bidding wars for homes have been more common, so you may end up having a number of offers rejected before getting one accepted.
Once your offer is accepted, youre one step closer to becoming a homeowner. But youll still need to go through the closing process, which involves mortgage underwriting, an appraisal, and possibly several inspections. Closing on a home typically takes 30 to 60 days.
Is Buying A House During Covid A Good Idea
For many, now is a great time to purchase a home.
Continued historically low interest rates are more than capable of offsetting a large portion of todays home prices, Merrill says.
However, mortgage rates seem to be on an upward trend, which means home buying might not be quite so affordable in the near future.
In addition, the home buying process has become more flexible to accommodate pandemic-era shoppers.
Many buyers can safely research homes for sale and complete the transaction without undue coronavirus risk which may involve relying on virtual tours, videos, and photos, as well as a remote or contactless closing.
Continued historically low interest rates are more than capable of offsetting a large portion of todays home prices Than Merrill, founder/CEO, FortuneBuilders
However, prepare to contend with a lot of like-minded home shoppers. That can result in a bidding war that will drive up the price of a home youre interested in.
With continued low inventory, expect demand for affordable housing to outstrip supply for the foreseeable future.
If you have the resources in place, including down payment or closing cost assistance, buying a home now can be a great long-term investment, suggests Tomas Satas, founder and CEO of Windy City HomeBuyer.
Just be prepared for the challenges involved with viewing a house virtually versus in-person. To protect your interests, insist on having a professional home inspection conducted.
Also Check: Small Business Grant For Veterans
Bank Of America Helps Educate First
Homebuying Experts Demystify the Process, Give Prospective Homeowners Greater Confidence
Bank of America has launched a new educational video series designed to simplify the homebuying process for prospective first-time buyers. The First-Time Homebuyer Online Edu-Series features Bank of America experts providing guidance and tips on homebuying, and is the companys latest effort to help more individuals and families pursue sustainable and affordable homeownership.
The six-episode, on-demand series, hosted by BuzzFeeds Hannah Williams, covers key aspects of homebuying and teaches viewers smart strategies to shift attitudes from How do I do this? to I can do this. Video topics include:
- Five Stages to a Home of Your Own
- Preparing Your Finances
- Prepare, Prequalify and Get Preapproved
- Find a Home and Make an Offer
- Apply for a Mortgage
- Close Your Loan and Move In
The path to homeownership isnt always easy to navigate, but this series creates a roadmap to take you from renter to owner, said Kathy Cummings, senior vice president of Homeownership Solutions for Bank of America and an expert on preparing to buy a home. We created this series to demystify homebuying and to give first-time buyers the confidence to pursue their goal of owning a home of their own.
To learn more, register for free access to the First-Time Homebuyer Online Edu-Series, and visit the Bank of America Down Payment Center for information about the banks down payment and closing cost grants.