This is a guest post by Redfin (www.redfin.com). Founded by software engineers, Redfin is the country’s #1 brokerage website and offers a host of online tools to consumers.
Redfin serves more than 80 major metro areas across the U.S.
Median home prices have increased by nearly 13% over the last two years, leaving many Texas home buyers discouraged by the idea of saving for a down payment. A March 2018 study conducted by Redfin found that 50% of millennial-aged homebuyers were most concerned with having enough money for a down payment.
The study also found that many had the common misconception that you still needed the traditional 20 percent down to purchase a home. This misconception along with the inflated market has led over 65% of millennials to seek out secondary income. Specifically, they plan to pursue additional employment, rent out a room to a friend or family member, drive for a ride-sharing service, and/or split ownership with friends or roommates.
What many millennials may not know is that even though the average down payment in Austin, Dallas, and Houston is still upwards of 20%, there are options available that can help ease this buyer pressure. Thanks to federal, state and local programs, home buyers may be able to purchase a home with nothing or very little down.
What is down payment assistance?
Down payment assistance is help provided by a local or state housing authority, a nonprofit or your lender that gives you the cash infusion you need for a down payment on a mortgage loan. While many of these programs are targeted toward first-time homebuyers, there are several grants, loans, tax credits and other programs available to people who have already bought and sold one or more homes.
There are three types of assistance programs:
- Grants: Down Payment Assistance that you don't have to pay back.
- Second Lien Loan: Down Payment Assistance in the form of a loan, that you eventually will need to pay back. Sometimes these loans are interest-free.
- Tax credits: You get a federal income tax credit, which saves you money that you can then use to qualify for a mortgage and pay for ongoing home expenses.
While each program has its own eligibility requirements, many require you to live in the home as a primary residence (meaning you can't use it as an investment property).
TSAHC’s Down Payment Assistance Programs
TSAHC offers several different mortgage and down payment programs that will ease you into homeownership. For example, the Homes for Texas Heroes Program is geared towards teachers, firefighters, EMS personnel, police officers, and veterans. The Home Sweet Texas Home Loan Program is available for buyers of any profession.
These programs exist to help people who wouldn't ordinarily be able to buy a home. While you'll still be subject to your lender's credit and other eligibility requirements, down payment assistance programs can help you become a homeowner when circumstances may have otherwise deemed it impossible.
On the House blog posts are meant to provide general information on various housing-related issues, research and programs. We are not liable for any errors or inaccuracies in the information provided by blog sources. Furthermore, this blog is not legal advice and should not be used as a substitute for legal advice from a licensed professional attorney.