Historically low mortgage rates and bargain-basement housing prices make the current housing market ideal for anyone in the market for a new home – as long as they have the money necessary for a down payment. Despite the tight credit situation, some state and local governments are offering “down payment assistance programs” to those in need and some banks are trying to be more accommodating.
The grants and low- or no-interest loans are geared towards first-time home buyers or buyers who haven’t owned a home for a while. According to the National Association of Independent Housing Professionals, the number of programs available number around 1,000.
The number of banks working with borrowers on their down payments has grown in the past year and a half with Florida reporting a 12 percent uptick in the number of5 banks working with the down payment assistance agency and Georgia reporting an increase of 22 percent from 2009.
This shift in lending is great for many low- to middle-income, potential home buyers. Even though housing prices are still low, a 20 percent down payment is out of reach for many people who live around expensive metropolitan areas such as San Francisco where the average single-family home runs around $590,000.
Not all first-time buyers are eligible for money towards their down payment since the programs are aimed at low to middle income buyers. But for those who do qualify, the typical program makes up to $80,000 available with interest rates of zero to two percent for people who don’t have enough money for a down payment. In addition, because the buyers have to go through preferred banks, the mortgage rates are also as much as 1 percent less than average.