Atlanta-based Down Payment Resource, the nation’s only databank for homebuyer programs, released its Homeownership Program Index late last year. The index revealed the wide range of homeownership opportunities available for homebuyers across the country.
However, home surveys, including one by NeighborWorks America, show that consumers have the desire to buy, yet many are unaware of all their home financing options, the home buying process and may overestimate the down payment and home maintenance costs.
The result is a huge missed opportunity for homebuyers, especially new homebuyers. Let’s educate any discouraged homebuyers out there, and separate fact from fiction once and for all.
Five Misconceptions About Down Payments
Myth 1: Programs are only for first-time homebuyers. While first-time homebuyer programs may be common, it’s important to note that the definition of a first-time homebuyer is someone who has not owned a home in three years. In addition, the index finds that 37 percent of programs do not have a first-time homebuyer requirement.
Myth 2: Homeownership programs make financing more difficult. There are now more than 2,400 programs available across the country (206 in Texas) and 85 percent have funds available for homebuyers. It’s important for new buyers to seek homeownership education. It’s often a requirement for down payment programs and it gives buyers confidence with the home buying process, financing options, including down payment programs, and budgeting.
Myth 3: You need to put 20 percent down. Today, a 20 percent down payment is not required and depending on the buyer’s situation, it may not be optimal. Homeownership programs allow buyers to save on the down payment and retain savings for home maintenance and improvements. Today’s programs include grants, first mortgages with below-market interest rates and annual tax credits.
Myth 4: Programs aren’t available in my area. There are programs available in every community across the country – rural and urban. It’s important for buyers to search for programs early in their home buying journey because it may help determine the most affordable part of town or price point.
- There are 19 programs available nationwide.
- 24 percent of programs are available statewide, offering broad opportunities not specific to a county or neighborhood. Statewide programs can often be layered with local programs.
- States with the greatest number of homebuyer programs, ranked in order:
- California (412)
- Florida (230)
- Texas (206)
- Maryland (111)
- New York (77)
- Massachusetts (73)
- Pennsylvania (71)
- Colorado (67)
- Georgia (63)
- Washington (59)
- Complete list of state-by-state data.
Myth 5: It’s too expensive to buy in my market. More than 14 percent of programs are designed for individuals providing an important community service, including educators, protectors, healthcare workers, veterans and other special circumstances. Especially helpful in high cost markets, the programs help workers live in the community they serve.
The information in this post was gathered from the Down Payment Resource October 2015 press release.