Grants and Down Payment Assistance (DPA)
DPA, or Down Payment Assistance comes in all shapes and sizes. DPA is an awesome way to bridge the gap between owning and renting. But let me delve into this a little to help bring some clarity in how they work.
First off, Grants are a form of DPA, but not all DPAs are grants. A grant comes from an entity, typically a government body, which “loans” you a sum of money (usually $5000 or more) for down payment and/or closing costs. Yes, I said “loans” and not gives. There’s only one grant I’ve ever worked with that was an actual gift never needing to be repaid. City Grants for example will loan you the sum of money and then lien the title to the house until repaid or forgiven. http://cdcutah.org/im-a-home-buyer/down-payment-assistance/. They do not charge interest nor require payments, but they are in fact a loan in most cases.
Like I said though, grants are a form of DPA, but not the only type. A very common DPA is a loan from Utah Housing (assuming you’re buying in the state of Utah). https://utahhousingcorp.org/HTML/hom1.shtml. Grants run out of money and have very low income restrictions. Many people can’t qualify for them. But Utah Housing offers DPA for higher income limits and looser qualifications. These are interest bearing loans that require repayment similar to the first mortgage used to purchase the house. However, the interest is typically very minimal as they are small loans with semi low interest rates.
There are also other forms of grants and DPA. There are institutions that fund some housing grants from time to time, but it can feel like chasing a unicorn to get one of them. There are also some grants funded by the lender by choosing a slightly higher interest rate than the market normal, though these come under intense scrutiny by the housing authorities and come and go for availability. And it’s worth noting that not all loans require Down Payment. Both the VA and USDA loans are 100% financing.
At the end of the day, DPA is a bridge between having no down payment and buying a home. If it’s the only way to get the down payment together in a reasonable amount of time, choosing DPA is often a smart decision. But don’t try to figure this out on your own. That’s why we’re here. Let us do the work for you. Just APPLY NOW and we’ll help you decide which path is the best one for you.
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