It can be challenging to buy a house right now.

Maybe you're starting out buying your first home after renting, or perhaps you're the parent of a child trying to buy their first home.

According to The Down Payment Resource Q1 Homeownership Program Index Report (https://downpaymentresource.com/professional-resource/the-down-payment-resource-q1-2024-homeownership-program-index-report/), nearly 80% of FHA buyers were eligible for DPA, but only 15% of buyers took advantage of it.  Providers of DPA programs include State and County housing agencies, local and municipal agencies, and more.  The goal is to bring home ownership to those who truly need it most.  The most recent NAR survey found 32% of sales last year were 1st time buyers, and 2/3 would have qualified for assistance of some sort.

I'm not talking about a few bucks here.  In fact, the average DPA last year was $17,000 in various forms given as interest free loans and/or grants that can often be combined to be used towards purchase.  Tony Pike, a mortgage broker with Movement Mortgage, said that on average, a DPA lowers a borrower's DTI ratio (debt to income ratio) by around 6% which can help a buyer afford more house for the same total payment.

He said that nearly all programs involve some type of income qualifying limitation, but most first time buyers (or someone who has not owned within 3 years) qualify, but some lenders either aren't familiar with the programs, or don't offer them.

According to Tony,

81 percent of all DPA programs have deferred payments: These are often second mortgages that only must be paid in full when the borrower moves, sells, or refinances.

53 percent are forgivable: These second loans are often structured over five years. For each year the borrower stays in the property, the loan amount is reduced by 20 percent until the entire 100 percent is forgiven after five years.

50 percent are forgivable loans with deferred payments: These second loans may be reduced to zero if the borrower stays in the property for the five or 10 years specified in the terms of the loan. If not, the payments on the remaining loan are deferred until the borrower moves, sells or refinances.

Bottom line:  Plan ahead!  Tell your kids to start saving some money to be able to buy their first home!  Skip Starbucks for a month and save up!  A little can go a long way!  Just last month, we had a buyer purchase her first home with less than $1000 total out of pocket.  That's significantly cheaper than renting!