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Saving Up for a Down Payment on a House? Down Payment Assistance Programs May Speed Up the Process!
A big hurdle for many people who’d like to buy a house is saving up enough money for a down payment. But many people make that hurdle higher than it needs to be by aiming for a 20% down payment. According to Lending Tree, 31% of Americans still believe they need that much of a down payment in order to buy a house. And the percentage is even higher (at nearly 40%) for Gen Z, Millennials, and parents who have children under the age of 18.
Considering so many people think that’s the case, it may come as a surprise that the average down payment for a house came in at 14.4% in 2023, which amounted to a median of $34,248, as Forbes recently reported. It’s lower because while some people certainly do put 20% or more down on a house, many home buyers take advantage of loans that allow them to put down as little as 3%.
Just knowing that can certainly make owning a home attainable more quickly, but even saving up for a lower down payment can be difficult, and take more time than you want it to. It can be hard to set aside money for a down payment when you have to pay your bills, put food on the table, pay off student loans, and/or deal with unexpected expenses.
So, how incredible would it be if you could get some help coming up with a down payment?! Well, you might be in luck…
There Are More than 2,000 Down Payment Assistance Programs
This recent article published by The Mortgage Reports estimates that there are more than 2,000 down payment assistance (DPA) programs nationwide, which offer loans and grants which home buyers can use toward a down payment and closing costs when purchasing a house. They even included a state-by-state list of some of the programs available that you can use to get an idea of what’s available. The amounts vary, but can be anywhere from a few thousand to tens of thousands of dollars.
As you might expect, each program has qualifications and criteria you need to meet, but if you do, these are the four main types of assistance that are typically available:
- Grants, which you don’t have to pay back.
- Loans that you pay back a little bit each month in addition to your monthly mortgage payment.
- Deferred loans that only have to be paid back if you sell the house or refinance the mortgage.
- Forgivable loans that don’t need to be repaid if you live in the house for a certain period of time.
While the article listed some of the programs available, they also suggest researching what else might be available in your area, because many programs are local and specific to an area. So use your favorite search engine to discover other potential money available to you. In addition, make sure to ask your local real estate agent or mortgage advisor for their insight and advice.
It May Take Some Time and Effort, but It’s Worth It
Beyond the time it takes to find and assess all of your options, the application and approval process could add to the amount of time it takes for you to find a lender that can work with down payment assistance and get approved for the particular program and loan.
Depending upon the available programs, you may also find that there are limits to the amount you can spend on a house, or where you’re allowed to buy a house. While it may feel like you’re being limited, or make it difficult to find many houses within the price range in your area, consider the alternative. Buying a home within the budget and limitations afforded to you by one of these programs can save you months, or even years of saving up money for a down payment, and get you into a house much sooner. Doing so will get you on your way to building equity through paying down your mortgage, and benefitting from any increases in value the market creates, or that you generate by improving the property.
The Takeaway:
Nearly 40% of people in prime home buying age groups believe they need to have 20% of the purchase price of a home saved up for a down payment. Yet the actual average was only 14.4% in 2023, and there are many buyers who put as low as 3% down on a house.
Unfortunately, even a low down payment can be difficult to amass, and can take months, or even years to save. The good news is that there are over 2,000 down payment assistance programs (DPAs) available throughout the country, which can provide grants and loans to home buyers who qualify.
