By Johanna Gómez, Lisa Hamilton and Jenny Rodriguez
UF-IFAS Osceola County Extension Services
Down Payment Assistance (DPA) programs help first-time homebuyers with loans or grants that reduce the amount they need to save for a down payment. There are over a thousand of these programs nationwide, many run by local governments.
DPA programs may vary by location. If you are planning to purchase a home and looking into these types of assistance you need to learn about what is available in your area, requirements, and if it is the right choice for you and your family.
Types of DPA: In general, most DPA programs will be interest-free, can be given in a form of a grant or loan, and the buyer will have to meet the guidelines and requirements. For example this type of assistance can be:
A grant, or a gift that never has to be repaid if you qualify according to the guidelines of the program, or
A second mortgage loan. Under this category, you may have a combination of a loan that has to be paid down alongside your first mortgage or a loan with deferred payments where you will have to repay only if you sell, move or refinance to cash out equity on your property. Another type is a loan as a second mortgage often five, 10, or 15 years that is forgiven over the years and only needs repaying if you sell, move, rent, or refinance your home before the term of the years established by the DPA program are fulfilled.
Important Facts to Know : To qualify, most of the DPA programs will require you to be a “first-time homebuyer,” meaning to be considered you need to be free of a property deed for at least three years, and also:
- Must be able to qualify for a mortgage through a lender;
- Must qualify by household income, household size, location of the home, cost of the home, financial status ;
- Must meet the minimum FICO (credit) required for the program;
- Must have, for most DPA programs, at least some funds of your own in your bank account;
- To apply most programs will request you attend a Homebuyers Class from a US Department Housing and Urban Development (HUD) Approved Counseling Agency, where you will receive a Certificate of Completion stating you completed a minimum of an eight-hour class. (For classes at the University of Florida/IFAS Extension visit Upcoming Classes visit us here University of Florida/IFAS Extension Osceola County)
Who qualifies? What type of loans are acceptable for down payment assistance?
Each down payment assistance program is different. Some will have income caps and might require the home to be located in certain areas within a certain price range. To qualify it will depend on where you live and what programs are available in your state, county, or city. To be awarded most of the DPA will look if:
- Buyers have low- to moderate-income;
- The home is located within the limits of the DPA program guidelines and within the price range allowed;
- The home will be used as a primary residence not as an investment (rental homes, second homes, or vacation homes are not considered for DPA programs);
- The DPA is used along with an approved mortgage program
- You are working with an approved mortgage lender which can execute the loan program.
Almost all DPA programs require you to borrow from approved lenders. Most common loan programs such as FHA loans, VA loans, USDA loans and also conventional loans are allowed by DPA programs. Private mortgage referring to a direct purchase funded by a private source in most cases will not be eligible for these government programs. Check your local DPA program websites for specific details.
Costs does the Down Payment Assistance cover: Since “down payment” explicitly refers to the up-front amount you contribute towards your home loan, some DPA programs will allow their funds to be used for your closings costs as well as a down payment. Others may not permit the use of funds for other purposes. When applying for assistance contact your local DPA programs to see if closing cost grants are included.
And, if you live in Osceola County, there’s good news: the Osceola County State Housing Initiative Partnership Program (SHIP) is accepting applications:
To apply for the Osceola County SHIP Program visit SHIP Program Apply Here
Program Requirements
- Applicants must complete an 8-hour Home Buyer Education Class;
- Obtain a pre-approval letter from a participating lender. View our preferred lenders list here.
- Must not have owned nor foreclosed on a home within the last 3 years;
- Must contribute to at least $1,000 of their own funds towards the purchase;
- Must meet all program guidelines
- Maximum purchase price of $280,000 of a single-family dwelling, townhome, condominium within Osceola County.
Assistance levels are based on the max purchase price of the family’s income level. The family is required to attend post-purchase counseling within 6 months from the purchase date. For income guidelines visit: Osceola County SHIP Program Down Payment-Purchase Assistance Program Flyer
Resources to Find Florida Down Payment Assistance Programs
The Florida Housing Finance Corporation (FHFC) has three DPA programs:
- Three Percent HFA Preferred Grant — if eligible they offer 3 percent of the home’s purchase price in the form of a non-repayable grant
- Florida Assist — offers up to $7,500 as an interest-free second mortgage. You don’t have to make payments on this, because it typically falls due only when you sell or refinance the home
- Hardest Hit Fund DPA — Only available to residents of certain counties. It lends up to $15,000 interest-free for five years. Each year 20 percent of the loan is forgiven, you pay nothing, providing you stay in the home that long.
For more information visit the FHFC website Florida Housing Finance Corporation
For other resources and DPA programs visit:
Florida Housing State Housing Initiatives Partnership Program
Homebuyer Loan Programs Wizard
Osceola County SHIP Homebuyer Down Payment Assistance
Orange County Housing Finance Authority
Remember: when buying a home, there are a lot of steps in the process, as well as many costs involved, and down payment assistance programs can help. Consider all programs have guidelines to follow and requirements to fulfill. Plan short-term and long-term goals at the time you are deciding to purchase a home, and if assistance is a major factor to make that decision.
Johanna Gómez, UF/IFAS Family and Consumer Sciences, Faculty Extension Agent Osceola County in collaboration with Lisa Hamilton, UF/IFAS Family and Consumer Sciences, Faculty Extension Agent Volusia County and Jenny Rodríguez, UF/IFAS Family and Consumer Sciences, Faculty Extension Agent Orange County. If you are interested in more of our programs please contact us at UF/IFAS Extension Osceola County at 321-697-3000. For more information about our programs and events visit us at http://sfyl.ifas.ufl.edu/osceola/ or find your local county UF/IFAS Extension Office at http://sfyl.ifas.ufl.edu/find-your-local-office/.
